Insurance Mass Marketers Challenged

"I think we will see a reduction in the number of companies being quoted because markets are evaporating," said Ken Harrigan, national sales director for the Travelers Affinity Marketing Group in Hartford.

He added that because the return on equity in the insurance marketing niche is relatively low, "the industry has not invested in technology to streamline the quote-to-close process necessary to make this profitable for both companies and agencies."

Increasing the number of sales at the worksite is a clear challenge, the panelists said. Average penetration levels are 10-to-15 percent after three years, so there is much room for growth, IMMA noted.

Part of the problem is the lack of product choice, asserted John Gastineau, vice president and principal of the Providence Insurance Agency in Charlotte, N.C. "Employers want more products," he said, adding that independent agents "need nonstandard lines in the payroll deduction market."

"Increasing penetration of our accounts is important," said Mr. Gastineau. "We must react at a time when the customer has an interest. A mailing once a year isn't going to cut it anymore. Long-term customers bring you the most money."

Brian Boose, vice president of sales at Prudential Working Solutions in Newark, N.J., agreed, urging marketers to go beyond mailings to employees. Use new customer relationship management software for "life-event marketing," he suggested, adding: "Don't fight trends; use technology." He said that holding "town hall meetings" with employees can also be useful.

Mr. Harrigan urged IMMA attendees to begin working on getting good penetration levels before the sale, during the account-development process. "You can almost set yourself up for failure if you don't do that," he said. "Do your homework at the grassroots level before the sale."

Specializing in niches is a way to increase penetration, said Mike Mucher, vice president of national sales at Allmerica Financial in Worcester, Mass. "Find a niche and stick with it," he said.

The worksite marketing arena faces new competition all the time, but the new players often run out of patience if sales don't happen overnight, the panelists said.

"New companies look at the affinity market as an attractive opportunity, but if you are not fully committed to it and can ride out the troughs you will become almost schizophrenic about this business," said Mr. Mucher.

"Stay the course," agreed Mr. Harrigan. "Align yourself with companies that are in the marketplace for a long time. Agents and platform providers will need to align themselves with the top-performing companies in order to position themselves to capture market share opportunities created by the instability. There are very exciting opportunities out there."

In his opening remarks at the annual conference, IMMA President Lowell Engelhard, principal of Providence Insurance Agency Inc. in Charlotte, N.C., observed that most insurance professionals have seen hard markets in commercial lines. But now personal lines, too, are deeply affected.

"In my talking with carriers, we are going to experience a hard market in personal lines like we never have," he warned. "We'll see 50 percent, 75 percent and upwards increases in homeowners.

"Companies are experiencing losses in wind and water. They have pricing, underwriting and distribution challenges. Some companies feel their only option is an exit strategy from homeowners altogether."

In a separate presentation on the state of the insurance industry, Chris Swift, who leads New York-based KPMG's insurance practices division, said that while the industry is in the greatest state of flux he's seen in 20 years, its fundamentals are sound. "The industry is still well-capitalized and relatively still well-run," he said. "The industry will prevail."

Last year's terrorist attacks "framed the strengths and weaknesses" of insurance companies, Mr. Swift added. One macro trend from Sept. 11 is that consumers are seeing more value in insurance and risk management, he said.

IMMA is an organization of property-casualty insurance sponsored-marketing professionals. Its stated mission is "to develop more effective and profitable business relationships between agents and carriers; and to foster professional and ethical standards in the marketing, sales and service of mass-marketed products."

IMMA's Web site is at www.immainc.com.