February
4, 2020
A new
LIMRA study finds 1 in 4 adult Americans cannot name a single company that
sells life insurance and a majority (56%) are unable to name three life
insurance companies.
As
discouraging as this may sound, it does reflect an uptick in unaided awareness
of life insurance brands among U.S. consumers (chart), compared to 2014
results.
Over
the past 5 years, life insurers have been increasing their advertising and
marketing budgets to increase consumer awareness and garner greater mindshare.
According to a 2017 Aite Group report, the life insurance industry was
projected to spend $5.6 billion in advertising and marketing in 2020, up 49%
from $3.7 billion in 2016.1 According to the study, insurers were investing
more dollars in social media, internet marketing, and radio and television.
One of
the biggest challenges for life insurers is that consumers generally buy life
insurance only once or twice during their lifetime, and according to LIMRA
sales data, more than a quarter of policies sold are by independent agents and
advisors, unaffiliated with a specific company.
In
these cases, it may be consumers are more aware of who sold them a policy than
the company that underwrites it.
In
LIMRA’s survey, 1,500 consumers named 200 unique companies (including some
insurance agencies and nonspecific companies like “Mutual”) out of the close to
800 life insurers in the U.S. However, there were 10 companies mentioned the
most, representing 61% of the consumer mentions2 (see sidebar).
The top
two factors driving consumers’ awareness of life insurers are advertising (46%)
and whether the consumer owns a product from that company (34%). A company’s
reputation is also a key driver of brand awareness (chart). For those who cited
reputation, 81% said the company they mentioned had an above average or
excellent reputation.
Over
the past five years, as life insurers have increased their digital advertising,
more consumers report seeing advertisements for life insurance. In 2019, 57% of
consumers said they recalled seeing an ad for life insurance in the prior three
months, up from 35% in 2014.
But
advertising doesn’t always ensure brand awareness. In 2019, nearly half of
those who remember seeing an ad don’t recall the name of the company sponsoring
the ad.
The
study suggests increased advertising has helped to improve brand awareness
among consumers, However, researchers believe some companies may find more
success with their advertising by targeting individuals or market segments that
have been identified as more receptive to the messages, based on available
data, Big Data and analytics.
1.
Life Insurance: Trends in U.S. Marketing and
Advertising Spend, Aite Group, 2016.
2.
2. While consumers cited Geico and Progressive
when asked to name life insurers, these companies do not manufacture life
insurance in the U.S.
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