Market Expansion: As America Becomes More Diversified In Areas Such
As Race, Ethnicity, Life Stage And Income Level, Some Savvy Insurers
Are Growing Their Bottom Lines By Targeting Specific Groups. Those Who
Fail To Do So May Find Themselves Falling Behind
May 1, 2005
No. 1, Vol. 106; Pg. 45; ISSN: 1527-5914
Market expansion: as America becomes more diversified in areas such as
race, ethnicity, life stage and income level, some savvy insurers are
growing their bottom lines by targeting specific groups. Those who fail to
do so may find themselves falling behind; Targeted Marketing
Stodgy. Slow moving. Old-fashioned. Those words are often associated
with the business of insurance. Yet in the race to capture the wowing
diverse American marketplace--and the growing spending of these diverse
groups--some insurers are being called progressive, aggressive and even
"Companies like Allstate are leading the nation," said Luke Visconti,
partner and co-founder of DiversityInc., which focuses on diversity and
business through its magazine and Web site. "Some insurers are doing a
good job [reaching diverse markets.] Others aren't doing any job at all. But
I'd say companies like Allstate, State Farm and Prudential are doing a
There's strong motivation for all businesses to reach out to diverse
markets. Among people of color, the household income has risen twice as
last as it has among white households in the past decade, Visconti said.
Seven insurance and financial services companies are included in
DiversityInc.'s annual listing of the top 50 companies for diversity, which is
based on a number of factors, including management commitment,
corporate communications and supplier diversity. Citigroup is No. 3;
Allstate, No. 8; Blue Cross and Blue Shield of Illinois, No. 17; New York
Life, No. 21; Prudential, No. 32; Metlife, No. 35; and Chubb, No. 47.
"I think it's a very progressive industry overall," Visconti said. He also
mentioned Safeco, which, while less well known to the general public, has
been strong in its pursuit of diversity.
He said some insurers just now may be waking up to realize that their
competitors "took off at the green light two or three years ago."
A new title has arisen for the executive heading the diversity charge: chief
diversity officer. All of the top 10 companies in DiversityInc's list of the 50
most diverse companies and 88% of the entire list have senior executives
for diversity who are either a direct report or one report away from the
companies' chief executive officers.
Not being involved in diversity is a dangerous position for businesses,
Visconti said. "No matter how you slice it, people of color are changing the
American dream, and that requires insurance," he said.
As insurers have mastered the art of segmenting risks, they are becoming
adept at segmenting markets, whether their aim is to reach out to a
particular race, ethnicity or gender; people of a certain occupation or life
stage or income level, or even college alumni. But how insurers approach
the market and what they do to tailor their message varies from company
It's not always easy to define underserved markets.
"From my point of view, all markets are underserved," said Phil Salis, vice
president of the individual business market for Metropolitan Life Insurance
Co. Life insurance penetration has fallen to 61% of adult Americans from
70% in 1984; and the average policy has fallen to $ 126,000, well below
the $ 459,000 that experts say is needed.
"But are there specific markets of underinsurance? Absolutely," Saris said.
MetLife has focused on four in particular: Hispanic, African-American,
Chinese and South Asian, which would include countries such as India and
To reach the Hispanic and Chinese communities, MetLife is focusing on
developing advertising in the appropriate language for cable television,
print and radio.
"Our focus is education," Saris said. "The groups we are focusing on are
the new immigrants, people who have been here just a short time. There's
a gap in terms of people's understanding of insurance products. It's a big
opportunity for us to help people learn the benefits of products and how
important they are to managing their future."
MetLife has translated several educational brochures into various
languages, he said. "They aren't sales oriented, but educational material
on retirement planning, life insurance, different kinds of life insurance, how
to figure out how much you need. We've translated them into Chinese,
Korean, Russian and Spanish, just to name a few. We want to provide
unbiased guidance and advice and information about products that we
sell," Saris said.
For the South Asian market, where most business is conducted in English,
and the African-American market, MetLife works to develop "culturally
sensitive advertising material that focuses on particular aspects of the
culture and community," Salis said. Sponsoring local events is a key
element of that outreach, he said.
For instance, MetLife sponsors the Hong Kong Dragon Boat Race in the
New York area, which draws thousands of Chinese spectators every
summer. It also lit up its New York headquarters building in red rights to
celebrate the Chinese New Year.
"All the action or transaction occurs at the local level at a local community,"
Saris said. Of MetLife's 6,000 career agents, about 25% are considered
multicultural. "It's a critical part of our strategy to have people in the
community who are from that community. We want to have people who
speak Chinese in the Chinese community. That's not to say you cannot be
successful not being Chinese in a Chinese community, but it certainly does
He noted they haven't tailored the products, just the marketing message.
"People's needs are basically the same. The difference is the types of
products that different markets buy."
For instance, the Chinese market is characterized by having "very
disciplined savers," Saris said. "They typically look at life insurance that
builds up a cash value. Our Chinese producers are the largest producers
of that product set."
Face in the Mirror
You want to have a diverse customer base? You'd better start by having a
diverse employee and agent base, says Safeco.
"We want to mirror both the community and the agencies so that we truly
do understand the need. We need to influence the thinking as it begins
right here. The grass-roots efforts are the people of Safeco, making sure
that diversity has a voice," said Eleanor Barnard, senior vice president of
sales for Safeco Corp.
In 2004, Safeco increased the number of women and people of color in its
independent agency base by 83%. About a quarter of its total agencies are
diverse. Also, at the company, 36% of new hires in 2004 were people of
color. The number in management grew 12.6%, in 2004.
"This isn't about shoring up the numbers," Barnard said. "People like to
work with people who live like them, look like them and think like them. It's
a trust factor. Marketing to diverse markets is like saying marketing to
America. It's what we do every day."
She said Safeco will also sponsor events in local communities, such as
supporting a local gay pride parade. Often, it's Safeco's own employees
who propose the sponsorship and staff the booth--and not necessarily a
salesperson, she said.
In addition to translating materials into various languages, Safeco has a
24-hour translation service available to help non-English speaking clients.
Filling the Void
Are there enough diverse agents trying to reach multicultural markets?
"No one knows the answer to that," said Barbara Miller-Richards, vice
president of agent development for the Independent Insurance Agents &
Brokers of America. "There's very tittle data on the number of minority
However, the IIABA has launched a diversity task force, which holds
educational seminars to help new agents meet the challenges of a diverse
"There's a number of ways to reach the diverse marketplace. One of them
is to work with agents already in those markets and help them grow their
business. The other is to help our mainstream agents learn about
emerging markets," Miller-Richards said.
"If your field staff making agency appointments is aware of the
opportunities in these emerging markets, if it's part of their mission, it
makes a big difference," she said.
Insuring Working America
One company views diverse markets not as a niche, but as its bread and
butter. New York-based SBLI USA Mumal Life Insurance Co. was formed
originally as the Savings Bank Life Insurance Fund in 1939 with the
mission of providing affordable life insurance to people who previously
couldn't afford it. The company converted to a mutual company in 2000,
with the goal of expanding beyond New York to become a national carrier.
"We serve the people who are not served by the traditional insurance
distribution system," said M. Nasim Ali, executive vice president for
marketing and sales of SBLI USA."We look at the underserved as those
with less than $ 75,000 per household, African Americans, Latinos, newly
arrived Asians and women. In some places, it's also the mature market."
Ali estimates the company's "niche" market is 70 million people.
"The traditional agent has a tendency to go after the affluent market. Our
market is the people who do not understand the importance of life
insurance. Lack of education is one of the major reasons this market is
underserved," Ali said.
Unlike car or home insurance, life insurance isn't mandatory. "For many
people, the only time they find out they need it is if something happens and
they realize they don't have the financial resources,' he said.
SBLI USA sells directly to consumers through banks, new retail customer
centers and by having a call center to field incoming calls sparked by its in-
language advertisements in ethnic newspapers, radio and television. The
company is fully bilingual in English and Spanish, and customers can fill
out forms in either language and speak to representatives in either
language at any time. The company estimates it has more than 1,000
pages on its Web site in both English and Spanish.
SBLI USA doesn't have to hire actors to do its advertising. Its 250
employees speak 21 different languages, Ali said. "The biggest asset we
have is the employees identify themselves with the underserved market,"
The company also designs simple, easy-to-understand products that are
affordable, he said. "We have a simple-issue term product where there is
no medical exam. The premium can be as low as $ 7.50 a month. We have
a travel accident policy that's $ 3 or $ 4 a month,"Ali said. When the
premium is so low, the company makes collecting the premium affordable
by doing it quarterly instead of monthly, and can accept payments by
check, credit card or electronic fund transfer.
The company also offers a permanent life policy to seniors 55 to 75 years
old that is guaranteed issue and builds cash value. The policy has a
reduced benefit if the policyholder dies within the first two year.
Also, the company often attends community events to answer questions
and educate people about life insurance.
"We have a very strong message of optimism and opportunity. People
believe in the American dream," Ali said. SBLI USA estimates it has
400,000 customers, and has grown its non-New York business by 21% in
the past two and a half years.
In the futuristic movie Minority Report, electronic advertisements read the
retinas of passersby, then tailored an individual message specifically to
that one consumer. That vision of a one-to-one marketing message isn't
here yet, but it's coming.
"With the availability of more data and more demographic information and
the tools to sort through that in a cost-effective and even local level,
marketers and companies are able to become much more targeted and
focused in their offering" said MetLife's Salis. "It's a trend that's been going
on for 10 to 15 years. It's a convergence of technology and being able to
sort through the data that's available."
The insurance industry has an opportunity to do a better job of true
marketing, Maria Umbach, vice president of life marketing for Prudential
Financial, said. "Not just pushing products, not just explaining products and
trying to sell them, but trying to understand the unique need of the market
and segmenting the market according to those needs, then teaching them
with messages. One size doesn't fit all."
The industry hasn't reached a level yet where there's a specific message
for everyone, such as a 24-year-old Asian woman. "It's not that finely
segmented yet, hut it is going toward more refinement vs. less," Umbach
* Insurers are becoming adept at segmenting markets, reaching out to
specific racial, ethnic or gender groups; people of a certain occupation, life
stage or income level; and members of affinity groups.
* In the past decade, household income has risen faster among people of
color than it has among white households.
* About 88% of baby boomer women have sole or joint responsibility for
making financial decisions for themselves and their families.
Liberty Mutual Insurance Cos.
Direct: 703.528.8740 - Fax: 703.852.3896
Cell: 202.210.7993 - E-mail: firstname.lastname@example.org