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The Life Insurance Market
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Last month I wrote of protection sales’ inevitable decline should our big insurers not spend more on marketing the need for cover to consumers. Last night I watched a tactful Norwich Union advertisement doing just that after England’s rugby match against Tonga. If others follow then our market will at last be seeking once more to create demand.
The big composite insurers have enjoyed real sales success in the motor insurance market, where cover is compulsory, but NU have clearly now realised that no such success will happen in our market, where far from compulsion the government has discouraged financial responsibility by encouraging indebtedness.
The truth is that to get people to insure one must make them concerned at the risks they and their families run if they don’t. It is the responsible fear of what might be that sells insurance. So a message that includes the effects of death or disablement is what is needed and that is never going to be an easy one to make powerful without creating offence; though the government do it all the time with health and safety campaigns.
NU, perhaps sensibly enough for a pioneering effort, settled for a lighthearted and thus far from convincing message, perhaps because they fear a stronger one being misunderstood as scare tactics. I fear that as a result their enquiry yield may not be enough to see the campaign continue. I hope I am wrong.
The next creative team to look at this issue should be braver. It really isn’t irresponsible to show working people what happens to them if they can’t work through disability and have to rely on the State. In fact the real scandal remains that Government persists in allowing people to presume that the welfare state is a decent state to be in. If only they told the truth many more would buy protection.
I’m told that one of the key reasons why our big insurers are reluctant to use effective insurance messaging is that they use the same brands for selling investments and savings (or sometimes even fruit and veg) and so don’t want to link them to the poverty caused by an uninsured disaster. It’s the specialist protection brands who could be braver and thus run more profitable ad campaigns, ones that truly shake up consumer complacency and thus our market.
But their problem is they are scared others will get all the business that their marketing generates, because they rely on IFA’s for fulfillment. But though all leads need to flow to advisers if they are to be most profitably converted (and NU are not doing this and so their yield will be further reduced), an adviser’s independence is not an insurmountable issue. Deals can be struck between switched on advisory distributors and insurers so that the leads generated by one campaign can result in sales of that company’ products only, subject to a small safety margin element for individual cases where that might be bad advice for, say, an underwriting reason. The distributor can easily explain all such cases to the marketing provider.
Closing the protection gaps needs those with capital, the insurers, to be radical and challenge the consumer’s apathy. NU have led and others should follow, with stronger campaigns and better fulfillment strategies, so the more enquiries yield more sales of better quality. Strong, marketing and a strong sales advice process, using those who know how to sell protection when they get the chance, is the combination we need to close the gaps. Well Done NU for making a start.
This article has featured in MoneyMarketing, 2007
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