Insurers attempt to build
Brands resist forces of commoditization
As competitive, technological and
demographic factors disrupted the
insurance category, brands sought
to differentiate in meaningful ways
and communicate distinctive brand
It wasn't easy. Brands in the US tried to stand
out in a noisy media landscape filled with
provocative or clever cartoon characters
and spokespeople, building salience by
emphasizing some combination of ease,
advice, price and care.
In other markets, like the UK, aggregators
stripped out value to offer rock-bottom
pricing, further commoditizing the insurance
category and forcing even traditional insurers
to compete on price.
Meanwhile, enabled by big data and
analytics, insurers continued to transition
from a product-driven to a consumer-centric
business model. But segmentation was
complex and required understanding how
individuals shopped for insurance and the
communication each preferred – digital,
mobile or in-person.
A generational change in attitude
compounded the challenge of adding new
customers because millennials are less
inclined to purchase insurance, or at least to
purchase it as their parents did.
All of these factors were folded into the
ongoing insurance category challenge of
demonstrating value and brand experience
to customers who buy insurance products
reluctantly, hoping never to use them.
more than price
Many brands added back value and
explained why value merits a higher price.
They switched their approach from being
product-centric (what we want to sell you)
to being more consumer-centric (how we
can help make your life better). Brands tried
to humanize the online claim process with
face-to-face web connections.
By using actors or characters to project
humor or friendliness, brands tried to
make buying insurance easier. In the US,
Geico's talking gecko lizard enlivened
insurance advertising, while Progressive's
spokeswoman focused on ease and price.
To position its brand as consultative and
helpful, a UK brand created a campaign
around the character of Winston Wolfe, the
"fixer" from the movie Pulp Fiction. In some
ads he fixed insurance problems. In other ads
he solved more everyday problems, like tying
a bow tie.
Insurers used various tactics to reach
insurance-averse millennials, less inclined
than their parents to face off across the
kitchen table with an insurance agent.
State Farm operated its Next Door Café in
Chicago. A brand named Oscar, to sound
cooler than brands of older generations,
was established in New York as the craft
beer of healthcare insurance.
Technology, big data and analytics
furthered disrupted the insurance
category with data monitors that enabled
providers to personalize rates with
pricing that flexed according to customer
behavior. These monitors included
telemetric devices in cars that recorded
driving habits, wearables that tracked
exercise and recorded health statistics,
and automated home devices like
Google's Nest thermostats.
Already in the insurance business as an
aggregator, Google raised its potential
impact on the category when it launched its
own branded wireless telecommunications
network. The move expands Google's
repository of data on human behavior that
could be used to personalize and price
Disintermediation of the agent continued,
mostly in home or auto insurance, where an
online application is relatively straightforward
and there is less need for human interaction
than in life insurance, where policies can be
more complicated, the stakes are higher, and
the sale is more emotional.
The US market remained bifurcated, between
strong agent-driven businesses and growing
online options. Even online brands sought to
refine their presence with propositions that
were not about price alone, but also included
interactive and consultative qualities.
In the UK, where insurance purchasing
mostly happens through online aggregators,
agents primarily served business clients
or consumers with complicated insurance
needs. In contrast, the Chinese brands
employed enormous teams of agents; China
Life had over 640,000.
Life insurers faced other challenges. Unlike
auto or home insurance, life insurance isn't
legally required. And it aligns with life stages,
only becoming a priority for most people
during periods of transition like marriage or
parenthood. Life insurance can be a baseline
product for insurers whose portfolios include
investment and retirement products.
China, other Asian
markets drive growth
In parts of the world where insurance and
banking are combined in a category called
bancassurance, insurers offered portfolios
of financial products. China's Ping An, for
example, provided banking and wealth
management along with insurance.
Because insurance is relatively new to
China, brands like Ping An, China Life
and CPIC educated consumers about
insurance and offered tailored products
that promised not only peace of mind,
(as in more developed markets), but also
sound investment for recently acquired
Profit for Hong Kong-based insurer
AIA rose 22 percent based on strong
performance in China and other areas
of Asia-Pacific, where it operates in
17 markets and has a bancassurance
arrangement with Citibank. Prudential, a
British brand, focused on growth potential
in Asia and enjoyed a strong rise in share
Focused more on Europe than developing
markets, Germany's Allianz experienced
strong sales and profit growth in life
and health insurance, but weakness in
property and casualty insurance as well
as in its asset management business.
Profit declined slightly for Zurich, in part
because of non-recurring costs and the
effect of low interest rates on investments.