Promoting Insurance Products

What Insurance Marketing Sells

The client buys not a promise of “protection from everything”, but the right to a payment or a service under specific conditions. Communication must therefore describe accurately the cover, exclusions, limits, deductible and the steps to take. The more complex the product, the more important it is to explain it with examples without distorting its legal meaning.

Original Analytical Material

To promote insurance products on the market, you must first understand which criteria or economic indicators matter to a potential policyholder when choosing an insurer. Without such analysis it is impossible to develop the insurance market effectively, and talk that the market is not developing because of a low insurance culture will remain a mere sedative.

For those ready to act, the editorial team of the magazine has carried out its own research, and we are ready to share our ideas on how to develop the retail insurance market.

LET'S START WITH THE BASICS

To sell any product, you need to awaken the interest of a potential buyer. The ways and directions of reaching the buyer's mind can be very different for different kinds of goods and services: attractive, colourful packaging, mass advertising, pushy promoters and many other methods. Insurance products have certain features that cannot be ignored when creating and offering them: they are products of passive demand, and to promote them, as marketers say, “push mechanisms” must be used.

Put simply, the policyholder initially does not realise the need to buy an insurance product. And the insurer's task is to create this need in them or, to put it quite simply, to make them buy.

Saying “make” is much easier than doing it, because an insurance product, as we are used to calling it, is not a commodity but a service. You cannot hold it in your hands or feel its taste and smell, and it will be rendered only when an unforeseen circumstance occurs, the financial consequences of which will be minimised by the insurance service. But first you have to pay for this service! You will agree that a product with such consumer properties is a “hard nut to crack”, and it is difficult to explain to an ordinary citizen who has so far been “lucky in life” why they need to buy insurance.

The policyholder initially does not realise the need to buy an insurance product. And the insurer's task is to create this need in them or, to put it quite simply, to make them buy.

Compulsory insurance products are a different matter. Here, whether you like it or not, if the law requires it, you must buy. But even here it is hard for the policyholder to choose, because under the legislation the tariffs for compulsory insurance products must be uniform across all insurance companies. And then standard promotion techniques come to the fore: advertising, discounts, gifts, tireless promoters (also known as insurance agents) and other “sales technologies”. As promised, we are ready to share our research on which indicators are key for the policyholder when choosing insurance products and how significant they are.

In fact, there are not so many indicators that make up a certain portrait of the insurer in the policyholder's mind: reliability, service (when buying the product and when receiving the insurance payment), the product range and the price of the product. Let us look at each indicator separately.

RELIABILITY

In our understanding, the term “insurer reliability” means a high degree of probability that the insurer will fulfil the obligations it has undertaken. Why do we say probability? Simply because the words “100% guarantee” are nothing more than an advertising ploy. Insurers choose how to prove this reliability depending on which side looks “bigger” or “prettier”. For example, some say they have extensive experience on the market, some are leaders in premium collection or pay out the most in claims, some have assets that reach sky-high levels, and some have simply received some kind of “medal” and consider it a competitive advantage that proves their reliability.

In fact, an ordinary policyholder who can barely count the money in their pocket should not need to understand what an insurer's assets, solvency margin or acquisition costs are in order to assess its financial stability. Not many people understand the language of numbers and are able to analyse financial statements. But this is not necessary. As taxpayers and consumers, we have delegated our right to assess an insurer's financial stability to a government body, the National Bank of Kazakhstan, the financial regulator that regulates and licenses the insurance companies operating on the domestic market. The main position of the mass consumer of insurance services should be as follows: “If an insurance company has a licence, then it meets all the criteria of a reliable insurer from the regulator's point of view, and as a consumer I do not need to worry about the company's financial indicators.” Financial indicators matter more to the regulator, which uses them to decide on a specific insurer: whether to “tighten the screws” and suspend the licence, or whether the company can continue to operate normally. The domestic financial regulation system has by now learned to respond to changes in insurers' financial position and has created early-response mechanisms and guarantee funds to protect the rights of consumers of insurance services. Therefore, once this definition enters the policyholder's everyday vocabulary in precisely this wording, the “reliability” criterion can be excluded from the list of competitive advantages. Reliability is the regulator's area of responsibility. If there is a licence, it means the insurer is reliable!

SERVICE

Service is a category that depends to a greater extent on the policyholder's perceptions: liked it or did not like it, satisfied or dissatisfied. But here too there are particular features. At the very beginning we said that by an insurer's service we mean the service when buying an insurance product and the service when arranging an insurance payment. Let us first look at the service when receiving an insurance payment.

To keep the examples “true to life”, let us take the most common product, compulsory third-party liability insurance of motor vehicle owners (MTPL). The main question for this product is how much the insurer will pay to restore the car after an accident. That is, what the damage assessment will be and whether this money will be enough to restore the car. Today damage is assessed by independent appraisers who hold the relevant licence and are accredited by the regulator. The methodology used for the assessment relies largely on the appraiser's expert opinion, and therefore the assessed cost of repairs can differ “several times over” between appraisals, as established practice shows. At the same time the insurer, as a businessman, is interested in paying as little as possible, that is, on the minimum assessment. The policyholder's interest is the opposite: to receive as much as possible, preferably with a margin, and the tempting prospect of a “freebie” attracts unscrupulous people, commonly called fraudsters, who do not mind profiting at the insurers' expense. That is why an insurer is simply obliged to treat every policyholder who applies for an insurance payment as a fraudster until it becomes clear that they are a bona fide beneficiary.
It is not hard to create an insurance product, and at times an abundance of them in an insurer's offer only confuses the policyholder, because every product has both pros and cons.

At first glance such an attitude may seem strange, but by initially suspecting every policyholder of fraud, the insurer acts not only in its own interests but also in the interests of the market, since it does not allow the insurance funds that have been built up to be used for the enrichment of individual citizens at the expense of the “common pot”. As we can see, a conflict of interest arises already at the stage of agreeing the amount of the insurance indemnity.

In general, when it comes to the insurance payment process, under civil law the insurance company is in the position of a “bride at the marriage market”: it may agree, it may refuse. And then the policyholder faces a question: either accept the insurer's terms or seek justice in court. In any case, the process of collecting documents and proving the cost of the damage rests entirely on the policyholder's shoulders. Even if the insurer declares that it provides some services for arranging payments, this is most likely connected with products that do not guarantee substantial indemnity and pursue mostly advertising purposes.

Insurers that take a strict approach to arranging the payment process, without deliberately understating the cost of repairs, most likely act more correctly, since they do not let fraudsters affect their loss ratio and, ultimately, their financial stability.

With this approach it is hard to avoid policyholder dissatisfaction, but promising something that will not later be delivered is an even worse option, so service in arranging an insurance payment can be excluded as a competitive advantage. The only option may be to provide additional services that in some way make the policyholder's life easier after an accident (a tow truck, a replacement car, compensation of certain expenses), but that is already a matter of additional services paid for by the policyholder, not within the cost of compulsory insurance.

That leaves the service when buying an insurance product. And this criterion really is an advantage and can become a field where there is room to “spread one's wings”. Geographic accessibility of points of sale, convenient opening hours, fast service, delivery of the policy “to your home” and many other pleasant little things can create a reputation for the insurer as a serious market player. And the most important point is not the beauty and functionality of the office premises but the staff, who will competently offer the potential policyholder the whole range of insurance products and convince them of the need to buy.

PRODUCT RANGE

By and large, a wide range of insurance products is nothing more than an advertising trick, and many policyholders are beginning to understand this. Coming to an insurance company with a clear intention and an understanding of what you want, you can get what you want at an individual price. Selling a “boxed” product is rather a way of making the task easier for sellers (they need knowledge only of specific options and risks) and for advertisers, who use the “attractive terms of the box” to lure policyholders into insurance company offices. It is not hard to create an insurance product, and at times an abundance of them in an insurer's offer only confuses the policyholder, because every product has both pros and cons. Taking into account all of the policyholder's wishes and individually calculating and assessing the risks for each retail client takes additional staff time and effort, and insurers as a rule try to avoid this.

That is why we see only advertising of “boxed” insurance product offers, which are even given names, and we have never come across advertising along the lines of: “Individual insurance programmes. Your risks are our responsibility” or anything like that.

In a word, nobody is surprised by an abundance of insurance products any more, and many already understand that a large quantity does not mean high quality. Consumers have no clear-cut attitude to the “breadth” of the range of insurance products.

PRICES

Since the main task of insurance is to minimise financial losses when an insured event occurs, the cost of such a service should not be high. In such a situation dumping, that is, lowering the price of insurance below the average market level, is beneficial for the policyholder. But there are different ways of reducing the cost of an insurance product. If the insurer controlled its operating expenses and reduced this component in the product price, and managed its loss ratio well by attracting “quality” policyholders and selecting risks, that is one conversation. But if the insurer built in from the start various mechanisms for “legally” reducing the insurance payment, for which our legislation has quite a few “loopholes”, especially in the area of damage assessment, or paid up to 50% commission to an insurance agent who, to increase sales volume, lured the policyholder with a low price, in effect giving back part of the agency commission originally built in, then such “cheapness” can cost the consumer far more than the initial saving on insurance. The situation is ambiguous, and there is no simple answer to the question “Is it good or bad to have ‘cheap’ insurance?”.

This is precisely why a knowledgeable policyholder does not always choose in favour of a low price. If a high price of a product is clearly justified to the policyholder on the basis of its high-quality consumer properties, I can say with confidence that such a client will shell out a larger sum for insurance than they expected. Once again, the whole question is the manner and quality of the offer.

Summing up our research, in the “dry residue” we have sales service and two more factors, the product range and the price, but we never obtained a clear answer on their optimal ratio. In a word, however we study the advantages of an insurer and its products that will ultimately attract the policyholder, there remains one single, objective factor that the insurer cannot always control: the seller of the insurance service. It is ultimately their talent, knowledge and qualifications that will determine the policyholder's decision whether or not to buy, and if so, from which provider. So instead of spending “gigantic budgets” on advertising and on creating various trappings, assuming that this is what will set your business apart from the others and attract the policyholder, we would like to wish insurers to put more effort and money into developing their salespeople, who are in essence the “face of the business”. And in conclusion we would like to recall a truism that cannot be left unmentioned: “Insurance is not bought, it is sold!”.

Modern Promotion Strategy

An effective strategy begins with segmentation by need, not only by age or income. For a car owner, speed of purchase and of claims settlement matter; for a family, protection of income and health; for a business, continuity of operations, liability and the safety of assets.

1. Research the client's risk. Interviews, enquiries and statistics show the real problems.
2. Formulate the value. Explain which financial consequence the product covers.
3. Create a clear path. From the first enquiry to the policy and the notification of an event, there should be as few unnecessary steps as possible.
4. Confirm the promise. The terms in advertising must match the contract and the rules.
5. Measure quality. Take into account not only sales but also retention, complaints, response speed and satisfaction with claims settlement.

Search Promotion and Useful Content

An article should answer the user's specific question: what the policy covers, how much it costs, what documents are needed, and what to do when an event occurs. Structured headings, short answers, examples and up-to-date rules help both search and the reader. Repeating keywords without meaning worsens perception and does not replace expertise.

Topics Clients Really Need

• comparison of compulsory and voluntary insurance;
• analysis of cover, exclusions and deductible;
• step-by-step actions after a road accident, injury or property damage;
• checking a licence and an electronic policy;
• how to contact the insurance ombudsman;
• an explanation of cost factors without promising a fixed price.

Digital Channels

The website, search, social networks, messengers and apps must lead to a single reliable set of terms. It is important for the client to see the exact name of the insurer, contact details, the data processing policy and a secure payment method. An application form must not request unnecessary information before explaining the purpose of collecting it.

Ethics of Insurance Advertising

• do not promise a guaranteed payment for any event;
• do not hide material restrictions in small print;
• do not present a sample calculation as a mandatory price for everyone;
• do not create a false impression of a state guarantee;
• do not use fear or pressure as the main argument;
• clearly distinguish the insurer from an intermediary and from an information service.

Promoting Compulsory Classes

In compulsory insurance, marketing should compete on service, convenience and reliability of information, and should not create the appearance that the law requires buying a policy from one particular organisation. The client has the right to choose a licensed insurer unless the law provides otherwise.

Which Indicators to Analyse

• the share of enquiries that ended in an informed purchase;
• customer acquisition cost and the payback period of the channel;
• the share of renewals and repeat enquiries;
• the number of refusals caused by misunderstanding of the terms;
• complaints and the reasons for negative feedback;
• response speed and completeness of the consultation;
• the quality of leads, not only their quantity.

Conclusion

The best promotion of an insurance product is when the promise matches the real customer experience. Useful content attracts, transparent advice helps to choose, and correct claims settlement builds trust and referrals.

The material is intended for information and educational purposes; advertising communications must comply with the law and the terms of the specific product.