Life insurance marketing and sales materials go through many internal hoops before consumers ever see them. That starts at point of creation and continues on through legal and compliance review, production and distribution. What’s more, all must be done within budget and on time. But what happens once consumers see the materials?
Scott Kallenbach, Research Director, LIMRA Strategic Research, posed that question during a workshop recently at LIMRA’s Annual Meeting in New York.
Sometimes, people just draw a blank. That may have something to do with all those internal hoops.
To reach consumers, company materials “need to focus on outcomes,” Kallenbach said during an interview in advance of his talk. That is, they need to focus on how consumers perceive the content and meaning, instead of focusing on the output.
Focus on Consumer Understanding
What’s important is the customer understanding that comes from reading and seeing the materials, he indicated.
Agents need to focus on this too, he said. For instance, “it’s important that they explain a piece they are presenting to a customer in layman’s terms.”
To increase this understanding, companies and agents need to shift their focus in four key communications areas, Kallenbach said. They need to:
–Put attention on the information that consumers retain, not on the amount of information delivered.
–Provide disclosure in a context that people can understand rather than concentrate on providing complete disclosure.
–Make the content “intentional,” in the sense that it tells consumers what they need to know in language they can understand, not just on making the content defensible in a legal sense.
–Take a one-to-many “sharing” perspective which highlights how insurance enables people to share risk with many others, as opposed to a one-to-one perspective, which presents purchase and ownership as disconnected, singular activities.
Opportunity to Connect
When consumers can’t understand or retain the messages from their insurers, the industry loses the opportunity to connect, Kallenbach indicated.
To illustrate, he pointed to what happens when men go to buy an engagement ring. Most men walk into the jewelry store already knowing that the value of the ring should be equal to two or three times their monthly salary, the LIMRA executive said. Men know this because of a successful consumer-focused marketing campaign by the famous diamond cartel, De Beers.
That company put the purchase of a diamond engagement ring into “a context — the pay check — that people can understand,” Kallenbach said.
LIMRA is currently talking with insurance executives about doing something similar, he noted. The discussions are exploring what message will instill a sense of confidence and comfort with insurance.
The industry does have rules of thumb for, say, withdrawal percentages from retirement accounts and for recommended multiples of salary for life insurance, he allowed. But the discussions now underway are looking beyond multiples for an overriding message.
Make it Understandable
A point he kept revisiting during the interview is that the language the industry uses in many of its consumer materials is not understandable for a lot of people.
Life insurance content can be very formal and often includes jargon, he said. It would be more effective if it were conversational, with the focus on “telling the customers what they need to know.”
Too many times, industry communications do not align with that consumer perspective, for instance about protecting the family. In fact, he said, “our language can be intimidating.”
About his one-to-many suggestion, Kallenbach pointed out that the concept of sharing is popular today. Consumers like the idea that everyone “puts in a little bit” so that someone with a need can be helped.
That’s what people today call “collaborative consumption,” he said. It was the insurance industry that came up with the concept a long time ago, he added, but “we don’t get credit for it.”
Kallenbach suggested the industry highlight the concept now. For example, it could focus more on how adopting a healthier lifestyle helps not only the individual, who gains better health, but also the insurance pool that shares the risk.
Sometimes stories help, he noted. He recounted how two brothers whom he knows were planning to apply for life insurance. They decided to compete to see which one would get a better insurance rate. Their means of competition was adoption of healthier lifestyles — diet, exercise and the like. In the end, one did get a better rate than the other, Kallenbach said. But both brothers are continuing their healthier regimen to this day. It’s been two years now, and counting.
About legal and Compliance
Will use of more conversational language and context-guided disclosure put insurance communications in the crosshairs of insurance company legal and compliance teams?
“It would be great if marketing, compliance and legal could work together early in the process, to help consumers understanding together,” he said.
It’s important for everyone to follow the rules and the laws, he added. “But we need to put this into context for the consumer.”
A recent study of 1,500 consumers that LIMRA did jointly with Maddock Douglas found that the words, images and messages the industry uses to explain financial products don’t seem realistic or relatable to many consumers. What’s needed, the researchers found, is “authentic communication” that is easy to understand, down to earth, memorable, positive, credible and relevant.
According to Maria Ferrante-Schepis, Managing Principal-Insurance and Financial Services Innovation at Maddock Douglas and a Co-presenter with Kallenbach at the workshop, internalising authentic language provides a major innovation opportunity.
VIEWS FROM ABROAD
Question: What is the top life insurance trend or issue that will dominate the business in 2015?
“The top issue is the agency field force and our inability to attract new talent. Everyone is talking about how this is happening due to changing demographics. Well, the demographics are not changing. They have already changed. The changes include increased diversity, cultural shifts, the growth in women who have more spending power, and the way Gen- X and Gen-Y communicate and buy, and what their expectations are.
The life insurance industry needs to address the change or sales will continue to decline. Specifically, we need to change the way we sell to adequately address these changes.”
— Barbara Turner, CEO of Onesco and Chief Compliance Officer for Ohio National Financial Service, Cincinnati, Ohio.
The top issue will be finding efficient ways to reach the middle market with the goal of selling more insurance to this market. The reason is, the middle-market is severely underinsured and uninsured. I served in product development, agent training and marketing roles for insurance companies for 26 years, so I know that we tried as an industry to reach this market by advertising, but that didn’t work.
We need to change the experience so that we draw the middle-market buyers in. We have to change the process to something they will like so that they will ultimately buy. Too often, buying life insurance is a long process. You have to learn about it, make a choice, fill out pages of questions, ask your doctor to send the reports, and wait for things to happen; sometimes you have to wait two or three months. Many carriers are experimenting with this right now. For the last six months, I’ve been with a data analytics company; we’re bringing solutions that could help the carriers with this.
In a general sense, we need to find the right way to reach the middle market at the right time with the right message.”
— Denise Olivares, Director-Marketing Insurance, LexisNexis, Alpharetta, Ga.
“In view of all the changes we are seeing in technology, distribution, and decreased sales of life insurance, the top issue will be how to engage the consumer. We have difficulties in connecting so that consumers can access products and services in new ways.
This is a problem in my country, Canada, as well as in the United States. Consumers today connect on the web, and the legacy systems don’t impact them. The industry needs to connect in different ways that draw them closer.
A lot of this LIMRA conference is about thus issue. We need to access the middle-market in a cost effective way, whether that involves phone, internet, or changing approaches that make it so that insurance is not sold but rather bought. We need make changes so that people want to buy.”
— Alec Blundell, Vice President-Individual Insurance, The Co-Operators, Regina, Saskatchewan, Canada