By Paul Groves, Marketing Consultant and former Chief Marketing Officer
With the FCA’s current proposals to end dual pricing in home and motor insurance and to promote the concept of Fair Value, insurers will need to up their game when it comes to marketing and branding. Yet it seems many in the industry may underestimate the challenges they face.
Sheffield Haworth’s recent survey on the FCA pricing proposals showed that 56% of respondents expect them to have a positive impact on their brand. The same survey shows only 8% of respondents see branding as one of the biggest challenges of embedding Fair Value in their business. Also, only 14% of respondents indicated that they would be investing more in their Marketing and Communications departments.
From my 30-plus years of experience in marketing – first in retail banking, then in life insurance, and more recently in general insurance – this approach seems short sighted. Companies can’t take anything for granted when it comes to marketing and branding – especially when the market is going through such a significant change.
This article explores why branding is important, the role it has to play in promoting Fair Value, and how companies could help meet the challenges that likely lie ahead.
What branding is and why it’s important
Branding gets to the essence of what a business stands for – its purpose and how it’s expressed. But branding goes way beyond the marketing team.
“At its core, a brand should have a measurable commercial impact.”
Marketing gets to communicate the brand but delivering the brand is more important, and delivery is way outside the remit of marketing. Claims, pricing, underwriting, distribution… all of these are part of that brand proposition. It’s something that touches on almost every part of the business.
For Marketing, the challenge is to express that brand to several different audiences:
- Prospective customers – why should they become a customer. Why are you different?
- Existing customers – why should they stay with your company?
- Distribution partners – why should they sell your products and how can you make it easier for them? What are the benefits for their customers?
- Colleagues – how do your people feel about the brand and about working for the company? Does everyone understand the part they play in contributing and being part of the brand?
Brand is also something that should be tangible and measurable. At its core, a brand should have a measurable commercial impact. Branding is not posh, and sales is not poor.
Branding challenges around Fair Value
Thanks to the FCA pricing proposals, the nature of marketing motor and home insurance policies will change. Yet demonstrating and communicating Fair Value is a huge challenge when we’ve effectively built an industry based on price and have taught the consumer to choose based on price.
Focusing on price has made the industry lazy around brand. After all, why invest in the brand when that has little impact on how and why customers to choose your product?
“It’s a 180-degree turn to go from pushing policies based on price to trying to communicate how your brand is different, what it stands for, or what kind of service delivery you can offer.”
It’s a 180-degree turn to go from pushing policies based on price to trying to communicate how your brand is different, what it stands for, or what kind of service delivery you can offer. Because so many in P&C insurance simply haven’t had to do this before, they may now lack the skills to do it effectively. If it’s true that few insurers are looking to invest in their Marketing teams, then this problem is only likely to get worse.
Already, I can see many in the market throwing up their hands and turning to marketing agencies. But there are risks here too. A marketing team with little experience in branding will likely struggle to manage an agency effectively, leading to esoteric branding messages that have little to no measurable commercial impact.
Another potential risk comes with insurers comparing themselves to their peers. There are some good people in insurance marketing, but I don’t think insurance is anywhere higher than top of the 3rd division for marketing and branding.
If you start comparing against others in the industry, you’re not showing any real ambition to break away from the pack and do things differently. That doesn’t give me a lot of confidence that insurers will break into the premier league and start marketing in a way that really resonates with consumers and sets their brand apart.
Finding out what customers want
Those insurers most likely to be successful are those that take the time to really understand what customers want. What does Fair Value mean to them in terms of their home insurance or car insurance? How can you build products and propositions that reflect that? Then how do you communicate that effectively?
When I worked at Allianz in Singapore, an insurer broke into the market there by saying they paid out on 96% of claims within 48 hours. Other insurers responded with mild irritation that their claims record was the same. But, significantly, only the new insurer had been bold enough to make the promise part of their branding. They benefitted as a result, because the message resonated with consumers. They had discovered what customers found important and addressed it directly.
“Communicating Fair Value means working out what consumers want from an insurance brand, making sure you deliver on it, and then communicating it effectively.”
When it comes to communicating Fair Value, insurers here in the UK would do well to follow this example. Take the time to find out:
- What customers see as important
- How good you are at delivering that
- How good you think you are
Many times in my career I’ve been through this process, only to find that the business didn’t know what customers valued most, and that they assumed they were better at delivering it than they actually were.
Communicating Fair Value calls for a step change in communications. It means working out what consumers want from an insurance brand, making sure you deliver on it, and then communicating it effectively. But insurers can’t afford to make any assumptions. They would do better to take the time to really understand customers and then build a proposition around what they can deliver.
How insurers’ marketing teams will need to change
Given the lack of experience in insurance around branding, it seems certain that marketing teams will need to change. But it’s not going to be simple.
For example, training existing teams won’t work if you don’t have the right people on those teams. On the other hand, you can’t just bring in marketing people from outside of finance. I’ve seen that fail more often than it works.
“Marketing teams will need to change. But it’s not going to be simple.”
So what’s the right approach? Successful insurance marketing rests on having the right skills in the right place. But it also requires an understanding of what you want to achieve before you can decide what skills are needed.
Data analytics is only going to become more important as the market leaders seek to build differentiated customer propositions. Bringing in data analysts from outside of insurance can work, but you also need to have people who understand the industry. This is where moving people into the marketing team from actuarial makes sense. As does bringing in talent from related sectors, such as insurtech or banking.
Similarly, when it comes to the team as a whole, my advice is to look for experienced insurance marketers who are frustrated, because they understand they could and should be doing more than they have been doing or being allowed to do. People who may have come into the industry from other sectors can work wonders, but they also need to know the insurance market.
At the same time, one area where bringing in outside talent really works is customer experience. External people have a somewhat different view of the customer than insurance people do. They bring a different mindset, so they can challenge assumptions and act as a kind of internal customer champion in the business. When it comes to working out what customers really want and how good you are at delivering it, the external view can be incredibly valuable.
There is a lot to unpack when it comes to how the marketing of motor and home insurance will evolve. As in the example of the new insurer in Singapore, those brands most likely to emerge as winners will be those bold enough to make tangible, measurable claims about why their pricing is fair and in what ways they are different to, or better than, their competitors.
“There are no easy answers to these challenges, but there are answers.”
An insurer that guarantees customers will receive x, y, and z because that insurer has certain clear values that allow them to make that promise – this is the sort of brand messaging that tends to make a difference. This doesn’t sound radical in any other retail environment, but from an insurance perspective, I don’t see any of the major brands doing this – not yet.
As the regulator continues to push on Fair Value, insurers have a choice. Whether to simply comply to the minimum necessary standards in a piecemeal, reactive fashion, or to be bold, take the time to truly understand what customers value, and then provide it in ways that are clear, specific, and tangible.
Many people have said that insurers would benefit from seeing the FCA’s pricing proposals as an opportunity rather than a threat, and this is certainly the case when it comes to your brand. So, to summarise:
- Don’t take anything for granted.
- Find out what customers actually want – not what you assume they want.
- The challenge around communicating Fair Value is probably bigger than you think it is, so start asking some pertinent questions now about what those challenges are likely to be.
- Be ambitious. Don’t just follow your peers and so the minimum needed to get by.
- There’s no easy answer to solving the skills problem within marketing teams, but you’re more likely to do so if you first take the time to work out what skills you need.
In general, we can say that there are no easy answers to these challenges, but there are answers. Those companies that start by asking the right questions are the ones who are most likely to gain competitive advantage and move ahead of the pack.
What challenges does your business face regarding the FCA pricing proposals?
Are you ready to embed Fair Value in your products, proposition, and marketing?
At Sheffield Haworth, we held a webinar in May with several experts to explore the challenges ahead. To get your copy of our handy 3-page summary of the webinar, click here.
Paul Groves is the founder of Typecast Ltd, a UK-based marketing consultancy. Prior to this, he was Head of Commercial Marketing Programmes at Allianz in Munich following several years as CMO at Allianz Asia Pacific based in Singapore. Paul has over 30 years’ experience working in marketing and branding in personal lines insurance, life insurance, and retail banking in Europe and Asia.