Chapter 6 - Marketing in Insurance

Introduction

Marketing used to be about just selling; now, while it still includes the sales function, it also includes the planning, pricing, promotion, production, and distribution of the item being sold.

The needs, wants, and characteristics of current and potential customers are determined through market research. Market research systematically gathers information about a market’s size and trends. Statistics gathered in this way identify the size and scope of the consumer markets that insurers might want to target. Also, this research helps to plan a company’s6-4promotional agenda to ensure that identified target markets find the company appealing. Many areas of the business environment (political, economic, social, and technological) exert an influence on the market. For instance, marketing divisions must consider how government regulations affect services or products offered.

This section explains why market research is important to the insurance industry.

Market Research

Sources of information used for market research and marketing campaigns include government data about high-density population areas and spending levels in major categories. Local newspapers, online searches, regional real estate board data, and Statistics Canada data are examples of data sources that gather information that can be applied to forecasting development patterns and models in specific areas of interest within consumer and commercial markets.

Under certain conditions, companies may find it appropriate to conduct mass marketing campaigns. Mass marketing aims to reach as many prospective customers as possible; no particular segment of the population is targeted.

Most often, companies focus their marketing plans around the specific type of customer they intend to insure. Thus, the company must define the characteristics of its target customers. There are four main categories of information about consumers that are likely to help when developing a marketing plan:

1. Demographics are statistics that show the characteristics of a population, such as age, gender, marital status, family size, income level, education level, geographic location, and occupation. For example, the demographic information for a commercial client includes its industry type, company size, annual revenue, and geographic area.

2. Buying behaviour refers to information about how and when consumers purchase goods and services. If an insurer decides to focus on delivering insurance online directly to consumers, it should determine which segment of the population uses the Internet and what percentage of that group would consider purchasing insurance via the Internet rather than through a broker.

3. Psychographics is the study and classification of people according to their attitudes and aspirations as they relate to market research. This information evaluates what makes consumers buy a certain product. Depending on the nature of the product or service, this may involve finding out about the hobbies of potential clients.

4. Location (geographic) segmentation differentiates consumers by where they live or work and differentiates businesses by whether they are local, regional, national, or international in scope.

People within a target group may perceive the benefits or value of products differently than expected. Research can help to dispel any unfounded assumptions about the way that consumers think.

Market Segmentation

Once an organization has gathered information about a market, it can use market segmentation to break a larger group of customers into smaller sections. A segment is a particular subgroup of customers. Segmentation of the market allows for concentrated marketing efforts.

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Markets are divided, using market research data, into segments of the population with similar needs, circumstances, and traits; the segments respond similarly to a particular product, service, or strategic marketing program. Dividing up the market allows a marketing team to identify which segments are big enough to justify funding, which have the potential for growth and increased value, which are not dominated by competitors, and which show a genuine need for the products and services offered. Customizing products and modifying promotions allow companies to capitalize on the best competitive features in each market segment.

A policy contract wording can be modified to include special perks that appeal to a particular group of consumers. For example, policy limitations can be reworked to become very attractive to a potential niche market. A niche market is an identifiable subgroup of the consumer market. An example of a niche market is insurance for antique cars.

Results of segmentation may lead a brokerage to target middle-aged Canadians with high incomes (demographic) who purchase high-value property (behavioural), and who live or work close to the brokerage office (geographic). When market size is being determined, a company should also consider the geographical scope of the market in question. The extent of a customer base could be regional, national, or international. To decide the scope of an operation, consideration is also given to office location and employee resources. For example, if a brokerage operates from a mall and has no outside salespeople, its market is limited. However, if the brokerage has several locations, outside salespeople, and a virtual office, the scope of operations will be much broader for the brokers. When a product crosses into several market segments, each segment must be addressed when planning marketing activities.

Current Situation Assessment

The process used to assess the current situation within a market includes research and analysis of the prevailing trends and conditions of the market. An evaluation of the organization’s strengths and weaknesses, its relationships with customers and partners, and the competitive environment in which it operates is incorporated into this process.

The collected data must still apply to the market’s current situation. Any significant changes that may have occurred since the information was collected could affect its relevance. The source of the data tends to determine whether it is timely. Information gathered from trade journals tends to be timelier than government statistical reports.

It must be determined whether a targeted consumer market is growing, flat, or shrinking. Are insurers entering or leaving the market? Are mergers and acquisitions being planned? Are any insolvencies anticipated? Any changes in the environment may affect a marketing plan.

Marketing Self-Audit

The process of assessing the current situation within a company may include a self-audit. Data gathered from current and past initiatives allows companies to evaluate their sales by location, type, customer, and product. An organization must understand its current marketing programs for existing clients, products, or services because they can be used to develop new marketing plans. Example—Insurance Brokers Ltd. Marketing Plan shows how this works.

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Example—Insurance Brokers Ltd. Marketing Plan

Insurance Brokers Ltd. is designing a new marketing and promotional plan. To obtain a clear picture of where the company is today and how its current plan is working, it reviews the following points:

• Its existing product line to determine whether it meets clients’ needs and growth patterns

• Its current client base to determine if it should diversify

• Its current insurance markets for growth compatibility

• Pricing of current products, as compared to similar products offered by other brokers in its sales area

• Research compiled on potential clients and their current insurance providers

• Its existing promotional plan to gauge its effectiveness in meeting growth targets

• Its service times, service level agreements, and customer satisfaction scores to determine whether investments are needed in its technology stack to meet its client needs (for example, should it invest in chatbots, instant online policy issuance capabilities, and claims apps that automate claims processing?)

• Its approaches to customer service and renewal retention

• Its mission, vision, and values to determine its performance

Reviewing its purpose, values, vision, and mission statements reassures a company that it is doing what it says it is doing. What the company thinks it is providing to customers must match what the customers think they are buying and the service they receive. Companies must earn and maintain the trust of consumers.

Pricing history, distribution history, promotional history, and anything else that might help to develop a marketing plan is reviewed during a self-audit. Keeping a concrete history of the company’s strategy and performance preserves institutional memory.

Conducting a self-audit provides the opportunity for an organization to identify what it can improve upon. If an independent brokerage is the subject of the review, the broker’s focus will be on policyholders and on the markets the brokerage intends to use to service its clients. Brokers offer professional, independent advice; advocacy; efficient service; and flexible products to clients. For example, if there are many technology companies in the surrounding area, this is a good opportunity to hire brokers who specialize in IT coverages to market to those companies.

In a self-audit, the auditor also identifies any competitive advantages the company holds. Companies aim for a competitive advantage that is sustainable by distinguishing their services, products, and marketing philosophy. How a product rates compared to the competition should be discerned. Some companies may offer more expansive coverage or more accessible service to distinguish themselves. Superior customer service is a common goal and is also a typical strategy. A broker who is highly regarded in the community may have a monopoly on insurance broking in the area.

A broad customer list is an asset of a brokerage. Any special capabilities the brokerage possesses are also an asset. Thus, a brokerage may offer exceptional service, providing clients with 24-hour access to brokerage staff. Any type of initiative an entity has already completed successfully signifies expertise in that area; this expertise can then be counted as an asset. Demonstrated6-7success at creating niche market programs shows that the company knows how to create a niche market and that it has skill in that certain type of business.

Building a particular competency enables a company to differentiate itself. A company gains a marketing advantage from a competency when it can communicate that competency to consumers. Consumers must believe they will benefit from what the company has to offer.

Understanding the Customer Base

Acquiring a new customer is expensive for a broker, often costing more than is covered by the first year’s commissions. There is a collective cost of gathering information for applications and cost evaluations; doing background checks with a habitational insurance tracking system (HITS) for property to check losses; searching motor vehicle records for convictions, charges, and Autoplus; making appraisals; travelling for site inspections; having initial and follow-up meetings with the client; and marketing the account to interested insurers. It usually takes a financial incentive (lower premium) or an extensive communication program (sales force effort) to attract clients away from competitors. Once clients are on board and their trust is obtained, the renewal costs are lower and more profitable. In automobile and home insurance, it has been said that even a small increase in loyalty has a cascading effect, resulting in significant increases in the lifetime profits per customer.

Companies try to understand and quantify client movements and achieve a continuous net growth in their customer base. Past customers, who tend to provide slow growth, may show a change in quantity or regularity of purchase. Learning more about the reasons for lost customers may indicate problems with products or services. Existing customers form a stable base from which companies and brokers can slowly increase sales by cross-selling. To develop a marketing initiative directed toward existing customers, they must first be analyzed. The following questions form a foundation for assessing the customer base:

• Are most customers in one particular market segment or sector?

• Can the same product be sold to other market segments or sectors?

• Does the current customer base have other needs that are not being met? If so, what are they? Do opportunities exist to sell other policies to these customers, or can existing coverages be upgraded?

• If current customer needs are not being met, can policies be improved?

• Who makes the purchasing decisions for this client? Who should the company contact within the potential customer’s unit?

Assessing the Competition

The insurance industry operates in a competitive environment. Insurance companies assess their competitors, and so do brokers. Consideration is given to how competitors function in the market in terms of size, share, standing and reputation, marketing methods, production capabilities, profitability, and key strengths and weaknesses.

When assessing competition, a broker considers not only other brokers but also direct writers. The direct writer could be offering products to prospective customers on the Internet or social media; through advertisements on mobile apps, radio, television, or streaming services; or through referrals. The brokerage must evaluate how this affects its marketing.

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It is prudent for a company or broker to consider the possibility of competition from sources that are yet unknown. For instance, as a business becomes successful and the potential for its continued success becomes more obvious, other entrepreneurs will consider converging on the same market. This may drive premiums and profits down.

Ripple Effect

One company’s marketing launch will often be felt by other companies. For instance, when a new insurer enters the market, it might act aggressively to capture new business by offering better terms and possibly better products or service enhancements. Alternatively, it might narrow the terms of its products to keep premium costs down, and perhaps target a particular niche market. Any activity in the market of this nature could adversely affect another insurer’s sales projections.

Market Dislocation

When an insurance company leaves the market, it creates market dislocation for its existing customers. Those customers who were insured through the company are left without an insurer and must find another source of insurance. The insurance company may have decided not to service a geographic area, to remove itself from a line of business, or to wind up the business entirely. Remaining insurers must be prepared to examine the implications of any such move; it may be an opportunity to grow.

Underwriting managers who are current with what is happening in the industry may take advantage of market dislocation as an opportunity to expand. In this situation, a quick response is required to secure the good business that a departing insurer has abandoned. Whenever a gap opens in the market owing to the withdrawal of a competitor, it is necessary for remaining insurers to act quickly, whether by exploiting the new business opportunity or defending their profitability in the event the abandoned business is less desirable or does not fit their risk appetite or concentration goals.

Mergers and Acquisitions

Mergers and acquisitions (M&A) have affected all parts of the property and casualty insurance ecosystem, from insurers and brokers to vendors that support the industry. It has had ripple effects on distribution strategies. As insurers expand and gain market share through M&A activity, they can run out of growth opportunities should their distribution strategy be too restrictive. To enable continued growth and market share gains, additional distribution options are often added. Insurers may acquire brokers and captive agent models, launch direct-to-consumer divisions, or purchase industry-related businesses and vendors such as restoration firms.

Economies of Scale

For insurers, brokers, and vendors, there are other significant benefits that come from operational scale, beyond broader distribution options. The financial benefits of scale, or economies of scale, in a business are the cost advantages and increased efficiencies that companies achieve as they increase in size and output. The financial benefits of scale in a business include cost efficiencies, improved profit margins, increased negotiating power, greater access to capital, and competitive advantage. These factors contribute to the long-term sustainability and success of a company as it grows and expands its operations:

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Cost efficiencies

• As a business expands its operations, it can benefit from economies of scale, resulting in a reduction in the average cost of delivering its product or service. In insurance, this reduction in per-unit costs can be influenced by various factors such as bulk purchasing, the efficient use of resources, and the spread of fixed costs (such as infrastructure costs, administrative expenses, and technology investments) over a larger premium volume. Fixed costs remain relatively constant regardless of production levels. As a business grows, these fixed costs can be spread over a larger output, reducing the fixed costs per unit and contributing to overall cost efficiency.

• Improved profit margins

  • With economies of scale, a business can maintain or even increase its selling prices while experiencing a decrease in production costs. This results in higher profit margins, as the incremental revenue generated from additional sales often exceeds the additional costs associated with increased production.

• Increased negotiating power

  • Larger businesses often have greater negotiating power with vendors and suppliers. They can secure better deals, discounts, or more favourable payment terms and conditions due to the volume of goods and services they purchase. This also contributes to cost savings and further improves the financial position of the business.

• Greater access to capital

  • Larger businesses may find it easier to access capital at favourable terms. Financial institutions and investors may be more willing to provide funding to businesses with a proven track record and stable, scalable operations. This greater access to capital can support further expansion and investment in growth opportunities.

• Competitive advantage

  • Achieving scale often allows a business to outperform smaller competitors in terms of cost competitiveness, pricing strategies, and overall market presence. This competitive advantage can lead to increased market share and revenue.

Introduction

A marketing strategy defines how an organization engages its customers, potential customers, and competitors and eventually becomes the basis of a marketing plan. Marketing strategies flow from the organization’s purpose, values, vision and mission statements, and broader corporate strategies and company goals, and they are implemented by marketing plans. This section explores how marketing strategies and plans are employed in the insurance industry.

Strategies

Every company has its own unique marketing strategy. Some are very informally developed, while the process of establishing others is more formal. Strategies are affected by the following:

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Dominance—Organizations are classified based on their market share or dominance in the industry.

• Does the organization lead the market; is it an innovator or a first mover?

• Does the organization challenge the current leader as a fast follower?

• Is the organization a late follower?

• Competitive advantage—Strategies related to market penetration and an organization’s sustainable competitive advantage involve the following:

  • Cost

  • Product or service differentiation

  • Market segmentation

• Innovation—Strategies related to the organization’s status with respect to innovation in new products, services, and business model:

  • Pioneer, first mover

  • Fast follower

  • Late follower

• Growth—Strategies related to achieving the organization’s growth:

  • Increasing sales to existing customers

  • Targeting new customers

  • Diversifying the market base

  • Intensifying sales efforts

  • Undertaking mergers and acquisitions (M&A)

Growth and earning a profit are typical goals of an enterprise, and they can be achieved by competing for market share. A company might accomplish this by developing new coverages or services, by developing a niche market, or by creating an incentive plan for the sales force. Growth can also be accomplished by acquiring another company. The amount of capital available to support growth is also a factor that affects plans.

Specializing in a smaller niche market allows a broker or insurance company to avoid direct competition with larger brokerages or insurance companies. A strategy to retain existing customers as well as increase their buying rate is often a crucial element of insurance-related enterprises. Implementing a marketing strategy requires proper planning and setting out objectives for the business.

Marketing Objectives

Marketing objectives are the means to achieve sales objectives and address each group within the target market. In general, marketing objectives must be quantifiable and also specific, measurable, achievable, relevant, and time-bound (“SMART” objectives), yet they must also be challenging.

Sales forecasts are subject to the same criteria as marketing objectives and, additionally, they should be linked to projected profits. By examining past industry sales over a reasonable period of time, sales can be estimated for the future; due consideration must be given to the growth anticipated by targeted industries and companies. Sales forecasts draw on information such as the size of the target market. It is useful to know how many consumers are currently insured and how many potential clients exist. Also, goals are adjusted according to the desired market share. Objectives are set for every segment of the targeted markets.

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Monitoring and analyzing results allows management to respond to changes in the market. It also allows them to determine whether or not results are on track; assumptions made about the environment may not have been correct, or unforeseen market changes may have occurred. The company must have the ability to adapt to trend reversals and unforeseeable factors; see Example—Valued Insurance Brokers: Marketing Strategy. Consideration must be given to trends in market size and the income, education, and buying habits of consumers.

Example—Valued Insurance Brokers: Marketing Strategy

Valued Insurance Brokers Ltd. plans to sell homeowners policies for high-value homes that are to be placed with ABC Insurance Company as it offers broad coverages and attractive pricing. If ABC decides that it will no longer write this type of risk, the intermediary needs to have an alternative insurance company available to write the risk or a plan to change the targeted consumer group.

Distribution Strategy

In P&C insurance, there are three types of market distribution: brokers, agents, and direct. The strategy behind how a product is sold and distributed affects marketing choices. Where a product is made available says something about the quality and status of the product; the channels of distribution must match the image goals of the product and also meet the intended customers’ perception of the product. An exclusive and expensive luxury product will probably not be sold on the floor at a large neighbourhood discount store.

The distributor of a product or service is responsible for determining the customer’s needs, matching them to the products and services available from an insurer, making sure the appropriate contract is issued, providing ongoing advice to the customer, and updating the contract as required.

Brokers, as intermediaries in the insurance transaction, have two target markets: They develop strong relationships and loyalty with both customers and partners or alliances. The customers of brokers include clients in need of insurance protection and insurers as markets that will provide insurance for those clients. Clients are targeted and managed for profitability and sales volume, whereas insurers are attracted and retained as strong partners who service clients’ needs. When planning and integrating marketing strategies, a brokerage considers the needs of both clients and insurers.

Positioning

When an organization has expertise in a specific area or is offering a specialized product, it can focus its efforts on specific potential clients. For example, a broker may choose to create a niche for itself with construction contractors. In this case, the broker would have insurers who are eager to write this type of business and who offer special contractors’ coverages. Knowledge of the special types of services needed by construction contractors is required. For instance, services offered in such a niche include access to a bonding facility. To position itself strategically in the contractors’ marketplace, the brokerage has producers on staff with special knowledge of the construction industry and the particular needs of contractors. The company will advertise this competitive advantage.

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To determine a product’s positioning, issues such as its competition, how it is perceived, the needs and desires of its targeted audience, and the emotional response that the product or service naturally evokes are analyzed.

Positioning Statement

When an analysis of the product’s position is complete, the brokerage develops a positioning statement that identifies the target market for which the service or product is intended. This statement reflects the unique selling proposition exemplified by the service or product; it is the basis on which the service or product is differentiated from others in its competitive space. Example—Valued Insurance Brokers: Positioning Statement illustrates this.

Example—Valued Insurance Brokers: Positioning Statement

The positioning statement of Valued Insurance Brokers Ltd. promises its existing contractor clients that it will have a licensed broker available to discuss their insurance needs at any time, day or night, seven days a week.

If a company develops a positioning statement, the statement is the foundation of the marketing strategy. A positioning statement articulates the strategic direction toward which all activities are to be directed. This statement is like a promise that the organization must deliver. For instance, if Valued Insurance Brokers Ltd. does not have a sufficient number of trained staff available to answer queries or provide expertise to its targeted customers, the brokerage’s positioning statement has no value. In Example—Valued Insurance Brokers: Goals, the brokerage needs to set out goals to support its positioning statement and thus be able to fulfill its marketing objectives.

Example—Valued Insurance Brokers: Goals

Valued Insurance Brokers Ltd. has set a 15 percent growth objective in commercial lines volume over the coming 12 months. It also acknowledges that it must maintain its current personal lines volume. The marketing plan that will allow it to meet its objective includes the following goals:

• Estimate total expected sales and the associated costs.

• Seek a 20 percent market share of quality business in the defined region.

• Design and develop a coverage package.

• Outline strategies to reach new clients.

• Fully use existing insurer markets by selling the whole range of relevant products.

• Solicit new insurer partners to expand the product lines when it is advantageous to do so.

• Determine which promotional events and types of media will gain the most exposure. Will print, radio, online, or television advertisements; email or direct mail marketing; social media or influencer marketing; or telemarketing be used? Will sales brochures be distributed at trade shows to showcase the brokerage’s programs? What other methods will be used?

• Devise a sales plan; divide sales territories, select and train any required staff, recognize up-selling and cross-selling opportunities, and determine how to contact prospects.

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Digital Marketing

Digital marketing for property and (P&C) insurance has become an indispensable strategy for insurance providers seeking to reach and engage with their target audience in today’s highly competitive landscape. This form of marketing leverages various online channels and platforms to promote insurance products and services, enhance brand visibility, and drive customer acquisition. Social media platforms, search engine optimization (SEO), email marketing, and online advertising are key components of a comprehensive digital marketing strategy for P&C insurance. Insurance companies use these channels to not only raise awareness about their offerings but also to educate consumers about the importance of coverage, highlight policy features, and address common concerns. Furthermore, data analytics and customer relationship management tools play a crucial role in optimizing digital marketing campaigns, allowing insurance providers to track and analyze customer behaviour, tailor their messaging, and refine their strategies for better targeting and engagement.

The digital landscape offers insurers the opportunity to create personalized and targeted campaigns, enabling them to connect with potential customers based on their specific needs and preferences. By utilizing data-driven insights, insurers can refine their messaging to resonate with different demographic segments, adapting their approach to changing market trends. This adaptability is crucial in an industry where customer trust and satisfaction are paramount. Overall, digital marketing for P&C insurance empowers insurers to establish a strong online presence, build meaningful connections with their audience, and ultimately drive business growth in an evolving and competitive market.

Marketing Plan

A marketing plan outlines the actions needed to implement a marketing strategy and maps all marketing activities. All marketing initiatives are limited by a budget and the resources available. Any business activity requires that a budget be developed, that appropriate resources be assigned, and that people be made accountable for results. The goals and priorities of the organization’s overall strategic plan are considered when formulating a marketing plan.

Although many smaller organizations do not have a separate department or specific individual dedicated to marketing, most organizations prepare a written report to formalize a marketing strategy. This report sets out guidelines for the marketing objectives and outlines future marketing actions.

Product or Service Overview

A marketing plan fully describes the product or service and its purpose. An overview of the product or service includes its features, pricing structure, distribution channels, positioning in the market, and the promotions and advertising that will be used to make it known to potential customers.

Customers choose to purchase a specific product or service because they can see how it will benefit them personally. A product’s or service’s benefits arise from its features. A feature is one of its characteristics—something it can do for the customer. The benefit to the customer relates the features to how the buyer’s life will improve as a result of the purchase. See Example—Feature and Benefit.

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Example—Feature and Benefit

• Feature: Discounted motorist assistance services

• Benefit: Insured pays less for a valuable service, related to driving, for which they already subscribe

New policy coverages can be developed as new types of exposures are identified. A new threat to a consumer’s financial security has the potential to become the basis of a new product.

Product Line and Services

An insurer must decide whether to underwrite a broad range of coverages or narrow its concentration to build special expertise and have a large volume of business in a limited number of classes of insurance.

Many changes have taken place since the first insurance policy was issued. These changes have occurred in response to changing consumer needs. Insurers must always be sensitive to new developments in climate, technology, lifestyles, and legislation, and to the problems facing society that are related to these changes. New opportunities for insurers arise regularly, and those who see them first and develop coverages and services to fit may gain an edge over later entries into the field. New coverages, creative packages, and higher efficiencies through better handling can all contribute to a company’s production of attractive and competitive new products.

Many insurers already offer various complementary services in conjunction with the policies they underwrite. This may include loss prevention, engineering, rehabilitation, and consulting.

Evaluating Marketing Strategy

It may be hard to discern which activities of the marketing strategy are actually generating sales. Results must be tracked, and the techniques used to monitor results vary widely. For example, an insurer may implement a direct mail program. To monitor or track the success of the campaign, a special code is included in the mailer that the caller needs to provide when requesting information. Without this piece of information, the results from the campaign cannot be tracked. Another example is an insurer conducting A/B testing, which is often done in marketing campaigns. The goal of A/B testing is to determine which offer—Offer A or Offer B—has been the most successful with customers.

Surveys may be conducted to find out what customers think about products and services. Survey questions may answer the following:

• What do customers like about the product or service?

• What do customers like about the competition’s product?

• Why have customers chosen to buy a particular company’s product or service in the past?

• What advertising messages has the customer seen prior to buying a product or service?

Complaints offer a rich bank of data for companies to analyze. They provide an opportunity for companies to come up with new marketing strategies, plans, and solutions. Assumptions made along the way must always be re-examined. An assumption made about why something has occurred may not be correct. Other reasons or causes should be explored to determine why something has actually occurred.

Introduction

In the property and casualty (P&C) insurance market, there are many ways to promote and communicate a company’s products and services to the public. This section reviews the various marketing promotion and communication methods employed by insurers. It also examines how damage control is managed and how an insurer communicates with the public when doing damage control.

Promotion Strategy

Promotion is an inclusive term incorporating various elements such as personal selling, advertising, sales promotion, publicity, and public relations. Promotion is undertaken to stimulate demand for products or services. The goal is to make consumers aware of the product and encourage them to act on its promotional message. Promoting a product or a brand requires that a message be developed and communicated in a way that is relevant to the defined targeted audience. Creating written marketing materials, an informative and engaging website, and a social media presence all qualify as promotional functions. All the materials and tools included as promotional material should be integrated so that, collectively, they spread the same message. Marketing efforts are influenced by market conditions.

To choose the most effective promotional technique, one must recognize which approach attracts the chosen target market. Offering special value-added services could appeal to certain customers. What do customers want from their insurance providers in terms of loss prevention, claims service, quoting, and document service?

The budget benchmark for promotional activities may be determined by what others in the industry typically spend on advertising. Alternatively, a percentage of sales may be used to decide on an amount to allocate to the promotional campaign. In times of fierce competition, an amount in excess of what others spend on similar efforts may be considered. In the long run, promotional programs are expected to generate more income than they cost to operate.

Advertising

Advertising messages build awareness of a product or service and evoke attitudes and actions in a targeted audience. The message of a company’s advertisement should echo the promise it is making to its customers. Factual information may be included to support this primary message. Also, the advertisement should adopt a tone that elicits an appropriate emotional image for the audience.

Advertising can be done through magazines, newspapers, billboards, mobile apps, social media, radio or TV spots or sponsored programs, product packaging and inserts, posters and flyers, directory listings, and in-store displays. Some common methods use the Internet through6-16click-through advertisements such as banners, buttons, sidebar advertisements, and pop-ups on which the user clicks to be taken to the advertiser’s website. Other Internet methods include affiliate marketing or influencer marketing, in which affiliates or social media influencers promote the goods and services of another company. Internet methods provide continuous access for clients and have the capability to automatically record the number of people who have accessed a specific advertisement. Such counters can also report the number of online sales.

Making use of an image that resonates with the general public is an effective tool in creating an ad campaign that leaves consumers with a lasting impression.

Newsletters and brochures are a proven and effective public relations tool, using direct mail or email to reach prospects and to keep in touch with current clients. It is thought that the best publicity is positive word of mouth from existing clients in the form of testimonials or referrals. Trade magazines serve as a venue to feature new insurance products or services. When a company has a product or service to showcase, magazines of this variety are a way to reach brokers and other members of the insurance industry. Subscribing to trade magazines published for the insurance industry provides the reader with current information about the marketplace.

Effective advertising messages tend to approach markets on both emotional and intellectual levels. While it is assumed that people make rational choices based on analyzed information, in reality the choices that people make are tied inseparably to emotional and experiential elements.

DEI in Marketing

Diversity, equity, and inclusion (DEI) play a pivotal role in shaping effective and resonant marketing strategies. Recognizing and embracing diversity ensures that marketing efforts are reflective of the varied perspectives, cultures, and backgrounds of the target audience. A marketing approach that embraces DEI not only helps in reaching a broader range of consumers but also fosters a sense of inclusivity, making individuals from different demographics feel seen, heard, and valued. This inclusivity is essential for building trust and credibility, as consumers are more likely to connect with brands that authentically represent their diverse customer base. By incorporating DEI principles into marketing, insurers, brokers, and agents expand their market reach and cultivate a positive brand image that aligns with the values of a socially conscious consumer base.

Furthermore, equitable and inclusive marketing practices contribute to breaking down societal stereotypes and challenging biases, fostering a more equitable representation of individuals in advertising and promotional materials. By avoiding stereotypes and promoting diverse role6-17models, companies not only contribute to societal change but also position themselves as leaders in promoting positive social impact.

Marketing Literature

Marketing literature and other collateral materials offer tremendous support to marketing and sales efforts. Such items should present a company’s image very clearly. The quality of the entire piece, the visual images used, and the content all combine to project a certain image. Marketing literature and related materials are designed to resonate with a target audience. Activities that create a uniform message may include such things as creating content for sales presentations in a flexible configuration. This allows anyone in the organization to use the content as a base, and then tailor it for specific applications.

Sales Promotions and Events

Some advertising efforts primarily affect the opinions of a target audience without asking for an immediate action. Eventually, however, the company does want the potential customer to take action; its efforts will then shift to sales promotions. Sales promotions all have an incentive designed to cause the potential customer to act; these might include a price discount, a gift with purchase, or something similar. Companies that offer incentives must ensure that they are in compliance with any guidance or rules related to sales incentive programs to ensure the fair treatment of customers.

Promotions must mesh with a company’s objectives and marketing messages or positions. Promotions are most likely to succeed if they connect to what consumers really want. What excites the target market about a product or service should be considered. The most successful promotions tend to be simple, and they put forth a unique idea that is of great interest to the target market.

Public Relations and Publicity

Public relations (PR) activity involves evaluating public attitudes, engaging in activities that promote public understanding and sympathy, and furthering brand recognition. Public relations efforts can keep a company’s name in the spotlight through articles in periodicals, news media, social media, industry websites and blogs, or trade magazines that foster the impression that the organization is an innovative, progressive leader in its field. This helps attract talented employees and executives, earns the respect of investors, and reinforces public interest in the firm and its products.

PR activities strengthen a brand name. Further to the associations of insurers and brokers working to build relationships with the media, individual companies also work to brand themselves. They can provide press releases to local media to highlight products, services, processes, technologies, upcoming events and seminars, and awards the company has received, plus spotlight the expertise and achievements of individual employees and teams. Companies can participate in charitable activities and events, such as food drives, clothes drives, and volunteering. They can also offer free webinars, white papers, or ebooks to the public on risk management practices to help lower risk, such as fire or theft prevention tips, plus support any initiatives that reduce risk, such as campaigns against drinking and driving. Many companies have ambassadors who go into schools and universities to talk about careers in the insurance industry. These efforts can be part of a multi-goal initiative to create a positive public image of a company’s brand.

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Public Image

A company’s public image refers to the way that clients and potential clients perceive it. Advertising, community service, and good public relations all contribute to maintaining a good public image. However, these efforts are not enough; there must be a solid basis upon which the company’s public image can be grounded.

There must be integrity on the part of insurance companies in all of their business dealings to earn the trust and respect of consumers. Intermediaries rely on the reputations they build within their communities as independent advisers. An organization that demonstrates social responsibility will improve its public image. Sponsoring special events, being involved in community organizations and groups, supporting charities, and supporting employees to hold positions of community leadership are some of the ways that this can be accomplished.

Planning Public Relations

Planning an industry or company’s PR ensures that what the media sees or hears about the entity in question is controlled and consistent with the image plan it has created for itself. Only designated or media-trained individuals should communicate with the media.

PR may include such areas as corporate announcements, crisis communications, and marketing. Tools used include news releases, feature stories and interviews, online chats and forums, opinion pieces, and photographs. Speeches and appearances at seminars, conventions, and similar events; community involvement and lobbying or social responsibility activities; and local, regional, or national talk shows are some other potential tools. The launch of a new product can be enhanced by offering a preview through the vehicle of public relations.

Press releases can be scheduled so that various media sources publish information that builds on itself, progressively revealing new items about a specific topic. The PR message conveyed in a press release must be newsworthy and interesting.

Direct marketing, email, Internet, and database marketing are some ways to reach a target market. Specific subsets of groups can be selected for targeted messages about a product or service from databases of names and very specific demographic information that are either purchased or created in-house. Finely targeted marketing efforts tend to improve response rates.

News Media Communication

Any message conveyed to the public must be structured to demonstrate the interests of the public; see Example—Automobile Insurance Reduction.

Example—Automobile Insurance Reduction

More than 200,000 policyholders will benefit from a new program aimed at reducing costs for their automobile insurance. The program is announced by Basics Insurance Company at a community safety meeting in Calgary, Alberta.

Positive messages should be prepared in advance to avoid defensive, reactive, and negative messages. Anyone in contact with the media should talk plainly, in everyday language. Members6-19of the public are likely to be offended or feel alienated when approached with messages that are delivered in “business speak” or seem bureaucratic.

Employees representing a company must be prepared with appropriate facts and statistics about the industry. Presenting information about the results of topical research and an array of typical illustrations of concerns, innovations within the industry, and new products requires that a base of knowledge be cultivated before speaking to the media. Companies usually have a designated person or team to deal with the media in response to a crisis. They advise staff to refer all queries to the designated person or team and not to respond to the media; it is important to send out a unified, solidified message that is clear and precise.

In a crisis situation, consumers may have to wait longer than expected for information. Companies may expect that newspapers and news sites publish articles about any perceived inaction on the part of the insurance company.

Crisis Communication Model

Crisis communication handles negative, speculative, or controversial questions. It tends to have good results when met with a public-spirited, plain-talking message delivered professionally by the chief executive officer of an organization or a designated spokesperson. Whoever is chosen for this task must be prepared to respond to journalists. Concerns must be defined using inarguable language. Statements such as “no comment” are rarely advisable because they tend to elicit a negative public reaction. When dealing with the media, it is best to arrange for an interview and determine the interview topics and issues in advance.

Before meeting with the press, at least three statements should be prepared illustrating that the company is aware of and cares about the situation. These statements may include facts, statistics, and any research results that reinforce the company’s position. The company should be prepared to share what is being done to resolve the issue and also what consumers can do to improve the situation, as seen in Example—Indemnity Insurance Crisis.

Example—Indemnity Insurance Crisis

Indemnity Insurance Company is concerned about settling claims promptly. To respond to this, Indemnity voices that it strives for fast and efficient claims handling. Part of its corporate vision statement addresses this very issue.

The company’s designated media contact person should deal with the media so that there is consistency in the message conveyed. Because the media contact person has been prepared with the best possible responses, they are best equipped to keep control of the exchange. In whatever direction the journalist goes, the designated media contact person will bridge to the message; this may be accomplished by deferring or redefining the question and using the ideas already prepared in the series of supporting statements. Denying inflammatory accusations is not recommended (see Example—Rising Premiums Concern).

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Example—Rising Premiums Concern

The insurance industry is concerned that consumers are expressing serious opposition to rising premiums.

The media contact person for an insurance company expresses concern about rising costs. They elaborate that the company is looking for new efficiencies for customers and that the company is actively pursuing a risk management focus and sharing safety strategies with consumers.

The media contact person states that the insurance company will publish statistics on how accidents drive up the cost of losses and compare those costs to the premiums paid to show that the rising costs are justified.

The prepared message is the focus. It enables the media contact person to establish control over the situation as long as they continue restating the message. When something negative happens to a company, the story may generate negative publicity. On a positive note, this publicity is also free media exposure. Communication made during the crucial first hours after an incident must be thought through so that positive publicity can be generated and the appropriate image conveyed. The product in question can even be featured by the media.

Summary

Companies tend to focus their marketing plans around the specific type of customer they intend to insure. Thus, the company must define the characteristics of its target customers. There are four main categories of information about consumers that are likely to help when developing a marketing plan: demographics, buying behaviour, psychographics, and location.

Once an organization has gathered information about a market, it can use market segmentation to break a larger group of customers into smaller sections. Segmentation of the market allows for concentrated marketing efforts. Dividing up the market allows a marketing team to identify which segments are big enough to justify funding, which have the potential for growth and increased value, which are not dominated by competitors, and which show a genuine need for the products and services offered.

The process used to assess the current situation within a market includes research and analysis of the prevailing trends and conditions of the market. An evaluation of the organization’s strengths and weaknesses, its relationships with customers and partners, and the competitive environment in which it operates is incorporated into this process. Reviewing its purpose, values, vision, and mission statements reassures a company that it is doing what it says it is. Conducting a self-audit provides the opportunity for an organization to identify what it can improve upon. In a self-audit, the auditor also identifies any competitive advantages the company holds.

Companies aim for a competitive advantage that is sustainable by distinguishing their services, products, and marketing philosophy. Companies try to understand and quantify client movements and achieve a continuous net growth in their customer base.

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The insurance industry operates in a competitive environment. Insurance companies assess their competitors, and so do brokers. Consideration is given to how competitors function in the market in terms of size, share, standing and reputation, marketing methods, production capabilities, profitability, and key strengths and weaknesses. One company’s marketing launch will often be felt by other companies. Any activity in the market of this nature could adversely affect another insurer’s sales projections.

When an insurance company leaves the market, it creates market dislocation for its existing customers. Whenever a gap opens in the market owing to the withdrawal of a competitor, it is necessary for remaining insurers to act quickly, whether by exploiting the new business opportunity or defending their profitability in the event the abandoned business is less desirable or does not fit their risk appetite or concentration goals.

Mergers and acquisitions (M&A) have affected all parts of the property and casualty insurance ecosystem, from insurers and brokers to vendors that support the industry. It has had ripple effects on distribution strategies. To enable continued growth and market share gains, additional distribution options are often added. For insurers, brokers, and vendors, significant benefits come from operational scale, beyond broader distribution options. The financial benefits of scale in a business include cost efficiencies, improved profit margins, increased negotiating power, greater access to capital, and competitive advantage.

All companies have their own unique marketing strategy. Some are very informally developed, while the process of establishing others is more formal. Strategies are affected by dominance, competitive advantage, innovation, and growth. Growth and earning a profit are typical goals of an enterprise, and they can be achieved by competing for market share. Marketing objectives are the means to achieve sales objectives and address each group within the target market.

In P&C insurance, there are three types of market distribution: brokers, agents, and direct. The strategy behind how a product is sold and distributed affects marketing choices.

When an organization has expertise in a specific area or is offering a specialized product, it can focus its efforts on specific potential clients and will advertise this competitive advantage.

To determine a product’s positioning, issues such as its competition, how it is perceived, the needs and desires of its targeted audience, and the emotional response that the product or service naturally evokes are analyzed. When an analysis of the product’s position is complete, the brokerage develops a positioning statement that identifies the target market for which the service or product is intended.

Digital marketing for P&C insurance has become an indispensable strategy for insurance providers seeking to reach and engage with their target audience in today’s highly competitive landscape. This form of marketing leverages various online channels and platforms to promote insurance products and services, enhance brand visibility, and drive customer acquisition.

A marketing plan outlines the actions needed to implement a marketing strategy and maps all marketing activities. All marketing initiatives are limited by a budget and the resources available. A marketing plan fully describes the product or service and its purpose. An overview of the product or service includes its features, pricing structure, distribution channels, positioning in the market, and the promotions and advertising that will make it known to potential customers.

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It may be hard to discern which activities of the marketing strategy are actually generating sales. Results must be tracked, and the techniques used to monitor results vary widely.

Promotion is an inclusive term incorporating various elements such as personal selling, advertising, sales promotion, publicity, and public relations. Promotion is undertaken to stimulate demand for products or services. Advertising messages build awareness of a product or service and evoke attitudes and actions in a targeted audience. The message of a company’s advertisement should echo the promise it is making to its customers.

A marketing approach that embraces DEI not only helps in reaching a broader range of consumers but also fosters a sense of inclusivity, making individuals from different demographics feel seen, heard, and valued. This inclusivity is essential for building trust and credibility, as consumers are more likely to connect with brands that authentically represent their diverse customer base.

Marketing literature and other collateral materials offer tremendous support to marketing and sales efforts. Such items should present a company’s image very clearly. Sales promotions must mesh with a company’s objectives and marketing messages or positions. Promotions are most likely to succeed if they connect to what it is that consumers really want.

Public relations efforts can keep a company’s name in the spotlight and foster the impression that the organization is an innovative, progressive leader in its field. A company’s public image refers to the way that clients and potential clients perceive it. Advertising, community service, and good public relations all contribute to maintaining a good public image