Insurance Marketers - Current Challenges Research
It is generally accepted that SEO is an important factor in any successful digital marketing plan, however, putting that aside, there are challenges that must be overcome in order for an insurance marketer to be effective. Four of the top challenges for insurance marketers in the United States today have been curated and presented below. Each challenge is explained, and context is provided surrounding the importance of the challenge to be addressed by insurance marketers.
Challenge: Changing Demographics
- It may seem much easier, as an insurance marketer, to send a blanket message to everyone, but in reality that just creates more work and fewer rewards. This is because that message will not apply to everyone which means potentially losing a large portion of an audience. With the tools available today, like data management systems, variable data composition software and improvements to analytics, a more complete picture of a target customer can be created so that a message can be personalized. If an audience can be targeted, there is a much greater return on any marketing investment.
- According to New York Life's Life Insurance Gap survey, Millennials in the United States self-report a 78 percent shortfall in life insurance coverage.
- Property Casualty 360 predicted that by 2042, the U.S. will be a majority-minority country, meaning ethnic minorities will account for most of the population. Between 2000 and 2010, 87 percent of the national population growth was composed of the white Hispanic population.
- America's population will see many changes in the upcoming years. The baby boomer population is nearing retirement age and Generation Z are entering the workforce. Traditional family structures are seen less and less each year. Ethnic minority groups are growing and are continuing to plant roots in the United States.
- According to this source, 22 percent of the population will be 65 or older by 2050. The Population Reference Bureau states that nineteen percent of families in 2020 consist of two parents and one or more children. This is a much lower number than in past years, as depicted by the graphic below.
- Changing demographics means insurers will have to learn about their new audience. As the U.S. ethnic landscape continues to shift, new cultures and ways of thought will enter the market. If insurance companies are going to succeed in attracting new customers, they will need to learn about the ideals that shape the new market. Insurance companies must prepare for the day in the not too distant future when the US population gets noticeably older. Those preparations should include studying the lessons of insurers in other regions where these trends are more advanced and developing world-class products that cater to the overall financial well-being of an aging population.
Challenge: Regulatory Issues
- An insurance marketer cannot just create engaging content, they have to be sure the content they produce meets compliance standards. Failing at this not only damages a clients’ trust; it can lead to legal troubles. According to the Harvard Business Review, the best ways to maneuver marketing in a regulated industry include: getting executive buy in, setting up the right processes and resources, partnering with the legal department, and having a strategy for sharing content, not just creating it. The regulations placed on the insurance industry constantly change as new laws are added, removed and amended, which makes it difficult to keep up and inform customers.
- Now that a lot of the Affordable Care Act (ACA) has been modified or removed, the challenges surrounding this have increased causing uncertainty, causing insurance agents to try to make sense of the changes and to explain those changes to their clients. This is where an insurance marketer can assist by creating timely online guides to help potential customers figure out which actions they should take and which kind of coverage best suits them and their needs. Insurance industry regulations are continually evolving, with "new opportunities and new limitations changing the way insurers do business."
- "The Tax Cuts and Jobs Act’s provisions have had impacts on insurers' operations and business decisions that go far beyond tax. PwC highlights the Act's most salient effects on insurers, as well as provide perspective on extensive IRS and Treasury Department guidance under the Act."
- According to EY, insurance marketers must manage persistent regulatory pressures and focus on customers’ best interests. Compliance investments can promote capital efficiency, competitive advantage and customer satisfaction.
- Life insurers also need to prepare for accounting changes relative to Targeted Improvements to the Accounting for Long Duration Contracts (LTDI), according to PwC. "While LDTI has now been delayed to 2022–2024 these changes are likely to impact core systems and processes. Insurers don’t have much time to lose in preparing for these changes."
- According to EY, "intense cost pressures, thin margins and low growth mean that many insurers naturally try to hold compliance investments to a minimum. A better approach is to define where investments to meet regulatory requirements can also generate meaningful performance improvements. For example, linking various financial, risk and actuarial systems will help streamline financial reporting and enhance business decision-making. The most forward-looking insurers will use this as an opportunity to transform their finance function and unleash hidden value, bringing their processes up to date and gaining unprecedented visibility into their business."
Challenge: The Economy
- According to Neilson Marketing Services, it could be argued that the most important challenge insurance marketing professionals face is the economy. In the United States, the economy had, up to the COVID-19 crisis, experienced excellent growth, but the path forward is now filled with uncertainty. "Most consumers are more cost-conscious than ever before, which creates a unique challenge for insurance professionals." Providing information on cost benefits, emphasizing how the coverage and features provides measurable benefits, is the key to getting potential customers to make purchasing decisions.
- The life insurance sector has seen marked increases in both market demand and in website traffic. Compared with the past several years, volumes in the first few months of 2020 are 25 to 50 percent higher, according to industry analysts watching Google search trends.
- According to Jennifer Fitzgerald, Policygenius CEO, the demand for disability insurance has increased during COVID-19. She is quoted as asserting to McKinsey that "on the P&C side, interest in homeowners insurance has surged more than we’ve seen in the past few years. For the P&C products, I think the spike in volume might be from people looking to shop around or save money on their insurance premiums."
- COVID-19 has led consumers to do more online searching as they are sheltering in place. "Those consumers are increasingly using search engines to learn about insurance products, to find information on filing claims, and to explore potential coverage gaps in their existing policies." Making digital marketing investments both now and after COVID-19 makes economic sense.
Challenge: Customer Connection
- In insurance marketing, the path to connecting with a consumer can be complex. An insurance marketer quite often answers to three masters: their company, another business (like a financial adviser or a banking institution) and then the consumer. In many cases, marketing materials are sent to these other businesses, who in turn, present them to the consumer. "Therefore, a marketing message must be powerful and understandable to not only the financial professional, but it must be crafted in a way that that person will be able to relay it accurately and engagingly to the consumer."
- Insurance marketers should personalize the consumer experience to boost conversions and revenue. According to Accenture, eighty-eight percent of insurance customers want more personalization from providers. "Expectations for the customer experience have never been higher and to acquire new customers, insurance marketers need to meet them, which would include delivering personalized call experiences."
- United States auto insurance companies that have given customers reliable and positive experiences have produced two to four times more growth in new business and thirty percent higher profitability than those with a lack of customer focus, according to McKinsey. There is a direct link between enhancing the customer experience and increasing profitability.
- According to this source, referrals are the most effective marketing tactic.
- Referral marketing would be the top priority if agents had extra budget to spend on marketing; a close second is social media marketing. Other areas insurance agents are interested in investing are search engine marketing, purchasing leads, email marketing, and digital ads.
- Fifty percent of consumers surveyed would be prepared to provide their insurer with additional personal and lifestyle information to enable them to seek the best deal for relevant services on their behalf, according to PwC.
- Eighty-one percent of companies expect customer experience to be the focus for any firm to obtain market dominance in any industry. This McKinsey study shows that seventy percent of consumers factor in the quality of its customer experience when forming an opinion of a business. "The importance of customer experience is true across product and service categories, and even more so when providers are selling intangible benefits, like in the Insurance industry."
- Research from Accenture shows that nearly 30% of insurance customers have not had a positive experience. "With declining customer loyalty and insurtech joining the arena, insurers are dealing with an unprecedented risk of disruption. It’s not surprising that in a competitive industry like insurance, where retaining customers is a struggle as big as acquiring new ones, customer experience has become one of the top priorities in the industry."