the hot branding-iron of CONSUMERISM

The new millennium is not only bringing Y2K exposures to the fore, but a sense of consumer branding. From companies, brokers through to reinsurers, the latest industry leader forums have all hosted an urgency to address consumerism.

The property and casualty insurance sector has hardly been renowned for its innovative approach to identifying buyer needs and branding products. That, however, is changing.

Until a few years ago, the selling of insurance was the exclusive territory of brokers — companies expressed little or no interest in the policyholder relations end of the business. Electronic delivery technology, which came into being in the mid-1990s and enabled direct writers to enter the picture, changed the rules of the game. Today, many of the broker-distributor companies are involved in developing customer support services with their broker partners. Even further telling, the Insurance Brokers Association of Canada (IBAC) announced a major drive this year to push branding of the independent broker. The association, at its recently held CEO Symposium, admits to having dropped the ball on the advertising front. “We have lost our advertising leadership position and this is simply not acceptable,” observes Mike Toole, president of IBAC in his CEO address. IBAC will not only be boosting its advertising efforts this year — including the appointment of a new advertising agency — but will focus on branding the bipper as a consumer “product”.

Product branding is also rising among company ranks, with three of the more prominent underwriters engaging in consumer advertising through their broker call support centres. While the prime objective of this advertising is to promote brokers, the companies in question are establishing “added value” to their products by interacting directly with consumers at a marketing level. The high level of radio and television advertising that took off from last year is a clear sign that companies, whether they be direct writers or broker-based, are sizing each other up in a bid for consumer recognition. The objective: de-commoditize insurance before the price war puts everyone out of business.

Some companies, however, such as Wawanesa Mutual Insurance Co., remain adamant that consumer marketing and customer relations rests with the broker. That said, Gregg Hanson, president of Wawanesa, admits that a further push by companies into call centre marketing will change the tide of the market — to survive, other broker-based insurers will have to follow the trend.

IBAC’s vice president Kevin Umlah notes, branding a service or abstract product such as insurance is easier said than done. “De-commoditizing” the insurance product is critical for the future growth of the independent broker, the association says. However, as Umlah observes, “advertisers and marketers throw the word branding around under the assumption that if you advertise enough you will create a brand that is recognizable to consumers, but it not so easy”.

There are three key elements to branding, he adds, the product must have consumer meaning, this “meaning” cannot change due to management changes, and the product has to differentiate itself from those of competitors. Due to the abstract nature of the independent broker product/service, and the diversity of needs within the brokerage market, IBAC’s branding drive will not be an easy accomplishment. “Our task will be harder because the proposition is more difficult and we do not have the hundreds of millions of dollars that big national or international brands have as part of their war chest,” Umlah says.

Based on current trends, it would seem that the advertising wars have only just begun. As declining market rates continue to “flatten out” the appearance of the insurance product, an increasing number of brokers and companies will be compelled to move into mainstream consumer advertising.

Having a sizeable “war chest” as Umlah notes is a distinct advantage. However, more importantly, insurers and brokers have considerable work ahead of them in identifying the unique service/product they have to offer over and above other financial service providers. Furthermore, increased combined efforts between brokers and companies may be the most cost and impact effective strategy against the direct writing advertising onslaught. But, regardless of the approach, one thing is certain: consumer branding has become an issue in the property and casualty insurance business.