The Life Insurance Market
Well have you seen the front page of Google? Type in “Life Insurance” and you will find the country’s biggest financial marketers herded in the rankings like so many elephants on a bus. This may seem hardly worthy of comment to you, but as a long time observer of that page I can tell you that none of them gave it the time of day a few months ago. They spent their Search Engine Optimisation marketing budget in other more exciting financial services areas.
But debt and investment are not yielding much return on marketing spend these days and so the game has turned, for a while at least, to the smallest financial services sector, the one that should be the biggest, protection. It’s a tricky market to make money in of course, on the distribution side of it at least, and several providers withdrew in whole or part from the market last year so provider side may not be that easy either, but on the positive side it may be that the public mood is shifting towards responsibility rather than profligacy and that must be good news for insurance sellers.
It has often seemed to me that the protection market is an inverse one. Falls in price lead to a reduction in sales, increased competition leads to increased fragmentation of distribution, both the reverse of what you’d expect. In truth, what seems most needed is a rise in prices, so that those who wish to grow by proposition and then brand and marketing development can shake themselves free of the nihilists who want a price war in a stagnant market. So let us hope that one benign effect of the credit crunch will be that a tightening of capital makes our market come to life again.
There really is no point in speculating on its possible malign effects. Who can fathom where the bankers and credit analysts’ disasters and the mortgaging of entire economies to try and avoid a depression will take us? When you envy an undertaker his job security all bets are off!
I take solace from the fact that history always repeats itself differently and perhaps the woes that afflict us will not be those of the only previous banking crisis of this scale. So rather than turn this into a suicide note let us bravely continue with Plan A. That is a marketing campaign, now most timely to drive home to consumers that they need to take personal responsibility for their own disaster recovery. The mood out there is of fear, caution and taking care. And that surely is the time to sell insurance? The big brands on Google clearly think so.
A fortnight ago I proposed in this column a marketing campaign to seize this moment and I have been frankly amazed at the positive response. Not one re-insurer, insurer, trade body or distributor has told me the will not support such an effort and many have openly said they will. So the plan moves on and I hope to come back to the industry with a plan of action within a few weeks of first mooting the idea. That plan is being drawn up by a team whose CV’s will reassure those we intend to ask for first round funding. We will get that, for it is not a big ask and our plan is a timely and attractive one. We will use that funding to develop a fully costed proposal for public awareness marketing campaign that can and we hope will be supported by politicians, regulators, consumer campaigners, the media and the industry as a whole. We will then seek funding from all industry parties to make that proposal reality. Getting that will be the hard part in these crunched times, but if we succeed then that generic public opinion changing campaign will break and we trust be followed up by myriad individual corporate lead generation campaigns.
If you ask where the money might come from I say, “Put up your premiums and protect the public properly.” That’s easy to say, but difficult to achieve as at this time the market is flooded not only with those Elephants crowding the Google bus, but also a myriad of start up refugees from the mortgage and other affected markets. These chaps will cut prices to win market share, long before they realise you can’t make money that way. Lapse rates are rising strongly and unless providers discipline their distributors and demand profitable behaviours we are still a serious shake out away from turning the pricing corner and making such a campaign likely to yield profit for our market. But that’s OK, such a campaign will take time to materialise and providers might well have changed their approach by the time it does. Here’s hoping!
This article appeared in the 16 October edition of Money Marketing.
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