Local Outlets Are A Key In Ethnic Marketing

For property-casualty agents and brokers to become successful at cross-selling life and financial services products to their ethnic minority clients, agents and insurers must make long-term commitments to the market and provide services tailored to their needs, say insurance professionals.

Insurers are increasing their efforts to improve their marketing to minority businesses, says Roosevelt Haywood, chairman of Washington, D.C.-based National African-American Insurance Association. But to successfully penetrate the ethnic market and cross-sell products, companies need to boost their presence in these ethnic communities, he said.

“Distribution outlets are a key if an insurance company is interested in the minority market penetration,” said Mr. Haywood. “And, if they are to be effective, these outlets have to be part of these communities. The company has to make itself known as a carrier that genuinely cares and works with people of these communities.”

But he emphasized that such efforts have to be carried out on a consistent basis.

“It has to be continual if a company wants consistent returns on its investments,” he noted. “Its not a one-shot proposition. As the minority market continues to grow, companies need to continue to invest to get the rewards.”

SAFECO Corp., headquartered in Seattle, is one insurer with an active diversity program targeting the minority market with various marketing tools and initiatives.

“I would probably say that in our business, 10 to 15 percent comprises minority clients, and thats continuing to increase,” said Vere Bryan, director of new product development for business insurance at SAFECO.

“We would also like to extend cross-selling as well. There are tremendous opportunities out there. If you look at the potential of small businesses owned by people of color, you are talking about $12.4 billion in commercial premiums.”

One of the reasons his company has focused on ethnic marketing is that minority-owned businesses are growing much faster than other businesses. These minority-owned companies are predominantly small businesses paying $50,000 or less in annual premiums, he added.

In targeting such businesses, Mr. Bryan advised that there are cultural differences insurers should keep in mind.

“One that jumps to mind is the language barrier,” he said.

“If you are a minority and own a small retail store, your needs are pretty much the same as other companies. There doesnt seem to be much ethnicity-driven needs.”

“What we have identified is the importance of how products are delivered and serviced. In our call centers, we have Spanish-speaking representatives. We also have sales-support materials in Spanish.”

SAFECO also maintains two “Urban Centers” in Seattle and Atlanta to attract people in urban communities and to serve as agent-incubators to find potential minority agents. “We have neighborhood academies, offering free seminars geared towards both business and personal consumers, to increase writing to people of color,” Mr. Bryan said.

The company also offers diversity training for agents. The aim is to teach them to identify emerging markets and how they can tap into such opportunities.

SAFECO also attends and provides sponsorship to various meetings, such as national conferences for the National Association for the Advancement of Colored People, Black Expo and Black Enterprise, as well as La Raza for the Hispanic market.

“One of the things you find is that companies have to do this in a genuine way. They cant just expect to take from these communities,” Mr. Bryan said.

“Many insurance companies are attempting to diversify and have agents in communities where they didnt before because people still like to do business with those of similar ethnic backgrounds,” said Milton E. Moses, the founding chairman of the diversity task force at the Independent Insurance Agents & Brokers of America in Alexandria, Va.

“Many insurance companies also have sensitivity training to make sure there is no discrimination among agents,” he said.

Mr. Moses, currently the chief executive officer of Chicago-based Community Insurance Center Inc., a major minority insurance brokerage in the Midwest, estimated that about 10 percent of all U.S. insurers currently have “serious, strong” programs targeting the minority market, a figure that continues to rise, he added.

Joe Hernandez, the current chairman of IIABAs diversity task force, added that insurers would benefit greatly by making sure they have diverse agent representation in ethnic communities.

“Its a tremendous opportunity, and this market keeps getting bigger,” Mr. Hernandez said.

He pointed out that according to the 2000 U.S Census, there are 36.4 million African-Americans with the collective buying power of $533 billion, as well as some 26 million Asians with the buying power of $229 billion and 35.3 million Hispanics with $388 billion worth of buying power, which adds up to more than one trillion dollars of buying potential.

Don Davis, director of urban and emerging markets at Hartford, Conn.-based Travelers Property Casualty Corp., also advised that insurers should focus on working closely with local minority-owned independent agencies when it comes to tapping the ethnic market.

“We tend to focus our efforts on agencies themselves,” said Mr. Davis. “They have the greatest understanding of their market segments. They are the extension of our company and they can, in turn, target minority customers.”

Harold L. Lee & Sons Inc., is one example of a minority-owned agency with strong ties to the local community. The agency, which has been serving Asian customers in New York Citys Chinatown since 1888, is a minority- and woman-owned agency.

Sandra Lee, the agencys chief executive officer, said she has seen a marked improvement in interest from insurers toward the minority market during the past decade.

“I would say that 10 years ago, carriers did not have a strong focus on diverse communities,” Ms. Lee observed. “But now, many carriers offer bilingual brochures and make efforts to educate multi-cultural brokers.”

“Carriers are definitely being more open. They understand that we have a lot to offer in terms of production and profitability,” she said.

“Many [carriers] have activities in ethnic communities, sponsoring local events, increasing their visibility. And many insurers didnt like underwriting restaurants, but now, they look at Chinese restaurants because of their multitude. They understand these restaurant-owners are hard working and that their customers are not litigious. They also see the Asian market is in the mainstream with large banks, real estate holdings and manufacturers.”

There is also a lot of cross-selling in the minority market, and this is all built on trust, she added.

“We offer property-casualty, life-health insurance and employee benefits,” said Ms. Lee. “Many of our clients started with life insurance policies. They would then open a business or buy a home, and we try to be a one-stop shop for them. One client, for example, started with a homeowners policy. Then he started a restaurant, and he needed other insurance and benefits.

“What was one prospect turned into six or seven policies. You might think a homeowners policy is small insurance but you never know where it will go,” she added.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 20, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Local Outlets Are A Key In Ethnic Marketing

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