Marketing Insurance: Standing at the Crossroads
It seems that regional companies are continuously failing to truly connect with their customers
January 21, 2014 4:02 by kippreport
Fuelled by legal requirements on certain segments, such as motor and medical, the Middle East region is starting to conceptualise and accept the necessity of insurance better. The industry is fast growing, albeit it’s saturated and extremely price- driven. The products that insurance companies sell are personal investments, best viewed as contractual promises than conventional products. For this reason, marketing and advertising strategies are fundamentally different to other sectors. Industry experts agree that firms must ensure that they are emotionally interacting more with consumers when attempting to increase market shares. So, what should insurance marketers do that will be different and, more importantly, why?
Insurance, as it should be, is a personal investment, something that is thought about and researched before purchasing. Therefore, theoretically, decisions are made based on independent circumstances and, hence, choices should be dictated by suitability and not price.
It is for this reason that many insurance marketers are left wondering about how to efficiently and successfully advertise and promote their brands, especially with huge disparities in consumers’ needs, affinities and decisions. When talking about marketing in any industry, it is difficult to not first look at how technology and digital interaction are being utilised. We have come to a stage where it is extremely difficult for most industries to ignore the importance of social and digital media. Insurance is no different, especially general and medical insurers whose market share is made up of the general population.
Many industries have already noticed the importance of social media and have found that they are reaping the rewards. Although insurance lags behind, the beauty of the digital age means that it is never too late.
Ben Elliott-Yates of Allianz Global Assistance, who recently gave a presentation at the annual Insurex Conference, talks about the undeniable benefits of the digital world. He highlights that some social networks have memberships greater than most countries in the world, however harbouring the ability to reach millions of people based on gender, age, occupation, hobbies and interests via a click of a button, without sophisticated market research tools or with nothing more than a computer or even a cheap smartphone is essential.
For the purpose of trying to under- stand existing strategies in the industry, POLICY speaks with Caroline Pain, head of international marketing at Aetna, an international insurer that primarily focuses on medical insurance.
Although Pain would not disclose the actual amount of money spent on marketing in the region, she does share that money is spent according to global budgets and different segments. She says: “[Our] business in the region is heavily intermediated and a lot of our direction is on talking to brokers and connecting in the right places.” Aetna, therefore, seems to have a strategy focused on dialogue and expression. Considering the idea that insurance companies, more so than other industries, must ensure a level of emotional interaction with customers, Aetna seems to be in line with this philosophy. “We focus on editorial, targeted print, conference and seminar presence, and ensuring that we comment in the right places,” adds Pain.
The question of digital media was posed to Pain and although her response was not as detailed, she says: “ We, of course, also consider the online world. A lot of care is taken while positioning our ads on digital media.” Looking at two of the most popular social networks, Aetna International unfortunately has extremely limited activity and visibility on both Facebook and Twitter.
As Elliot-Yates points out: “Social media has become a great way to build personalised relationships with customers,” and, in all fairness, Aetna is not the only one in the market that is failing to utilise social media.
Moving on, another issue for marketing in insurance that many multinationals face is understanding the local market and essentially localising strategies successfully. Having said that, Aetna claims that a strategy that encom- passes international principles must be executed in the local way. “Although we currently have a contract with Ogilvy, we use specialised, niche and, more importantly, local agencies to execute plans,” says Pain.
Overall, it is clear from the failures of some and accomplishments of others that a remedy for success in the region must comprise internationally innovative strategies that are executed in a local manner, although one is left wondering when the industry will start to seriously invest in social and digital media.
The reality is that the insurance industry has not yet modernised marketing strategies and as non-life insurance penetration in the UAE sits at a shocking 2.2 per cent, it is no surprise that companies are perceived to have fallen short. From this arises an interesting question: Should marketing and advertising campaigns focus on brand building and familiarity or should they serve the public duty of raising public awareness of insurance in general? Tarun Khanna, executive director at Nexus insurance, says: “At Nexus, we adopt a combination of elements when thinking about advertising and marketing. We look at two aspects; helping to raise public awareness about insurance and its different lines. We also look at enhancing Nexus as a brand. The key, we feel, is coining a balance between these two things.”
So, is the industry achieving this balance? It is difficult to agree and it seems that there is an awareness gap in the region and the UAE, in particular.
Andy McClure, a strategic marketing leader with extensive experience in the Middle East insurance industry shares a similar view. “If one company invests heavily in awareness campaigns, in essence, it will be doing the same for the whole industry,” as there is this idea that everyone will get a free ride and this is making companies more reluctant to invest in raising public awareness. He adds: “Most companies invest in brand awareness and because the market is not growing to its full capacity, we end up with a volatile market, dictated by price and not quality. Moreover, the industry needs to act as one.”
Because of the sensitive nature of insurance, marketing cannot and should not be blind to the reality that is a lack of public awareness and, therefore, marketers find themselves with a moral dilemma, forced to try and strike a balance between their strategies.
In addition, insurance is an inter- dependent industry and hence, dialogue is key. Another major issue is that insurance companies are often perceived as untrustworthy and, as McClure says: “You can’t advertise your way out of this,” with recent studies showing that only 14 per cent of consumers either trust or believe in advertising. “Marketing in the region is still seen as ads on Sheik Zayed road,” he adds.
Many companies will soon start to realize that the best form of marketing is improving customer experience. The actuality of the underlying tensions between customers and insurers is based on bad experiences and shortcomings in customer service.
So, what does the future hold for marketing in insurance? The long-awaited digital shift is on its way, since many companies are beginning to realise that a move away from billboards and bus stops to digital and emotional interactions with customers are key. However, without an improvement in customer experience, all marketing and advertising strategies will fall short. Generally speaking, there is an increasing vitality to ensure that a localised and personal relationship is built with customers. As mentioned earlier, companies cannot shy away from the fact that insurance is a promise and the more they distance themselves away from the local community, the more they will isolate their businesses and damage their market shares.