There are, however, significant signs that the industry has rebounded this year. Last year, the annualized statutory rate of return on average surplus in the property/casualty sector was 10.4% due to the hurricanes, Hartwig said. But the first half of 2006 saw an increase to a 13% rate of return.
"Profitability in this range, if maintained, would lead insurers to their best financial performance in nearly 20 years and would put industry margins on par with the Fortune 500," he said. "Profits will bolster the industry's policyholder surplus?a measure of claims-paying capacity or capital?and provide an additional buffer against the mega-catastrophes that lie ahead."
This is good news for the approximately 650,000 retail and wholesale insurance agents and brokers in the U.S., mainly small and midsize businesses that operate on particularly tight margins. Agents?both independent and carrier-operated?have helped spur potentially the best year in insurance policy underwriting since 1955.
Opportunities and challenges
Marketers targeting the insurance agent market perhaps have had no better opportunity to capitalize on its good fortune; however, they still must overcome some obstacles and challenges to make further inroads with this lucrative audience.
"The insurance industry continues to experience a lot of change, and yet remains more conservative and traditional than ever," said Felicia Stanczak, director of strategy and planning for Magnani Continuum Marketing. "National carriers and brokerages suffered some bad PR with [New York State Attorney General Eliot] Spitzer's investigations [of insurance fraud] last year as well as their response to claims from Katrina."
To top it all off, the marketplace is getting more crowded as smaller regional players emerge, contributing to increasing competitiveness and softening, Stanczak said. "With insureds becoming increasingly knowledgeable about risk management and the industry in general, smart marketers will go beyond traditional standard practices?such as a letter at renewal time?and work to build a greater relationship with the insureds before a claim ever gets filed.
"Successful insurance agents know how to build these relationships with their clients, but what if you're trying to market and/or build a relationship with the agent?" she asked. "How do you create a message that breaks through?"
Five important guidelines
Stanczak has five important guidelines for marketing to insurance agents:
- Make it memorable. "Whatever you do, it needs to be able to cut through clutter and break through the deluge of communications that these agents receive daily. Dimensional mailers and promotions can help," she said.
- Follow up. "Successful agents are successful because they are `people people,' " Stanczak said. "It's not enough to just send a letter and cold call. Design a program that predisposes [clients] to receiving your call. Also don't utilize a direct mail campaign and expect them to call you for more information."
- Communicate clearly that you understand their audience and specific niches they target or may be looking to target. "An agent that specializes in writing business with road builders and construction companies will appreciate that you understand their client needs and can help provide further assistance in the markets they are targeting," she said.
- Be succinct. "Know that these audiences are getting bombarded by messages from many carriers and businesses, many larger than yours with bigger budgets," Stanczak said. "The more concise you are in communicating the benefits you offer, the more likely you are to get heard."
- Make it about them. "Explain in no uncertain terms how you are going to help them grow their business and be successful," she said. "Many agents enjoy their careers because they like solving problems for their clients. If you can help them find solutions and keep their clients happy, the more likely they are to be receptive to your messages."
What media and vehicles should marketers consider when targeting this audience?
"National trade publications such as National Underwriter, Insurance Journal, Rough Notes, Agent & Broker and Independent Agent are excellent vehicles," said Ron Rotole, advertising manager for national general managing insurance agency Burns & Wilcox. "We use them because they are extremely targeted to the decision-makers and have national coverage, which makes them very efficient from a cost-per-impression standpoint."
On a local level, there are dozens of regional trade publications throughout the U.S. that Burns & Wilcox uses, Rotole said. "Although they are less efficient than the national trade publications, they effectively position us as a local resource," he said.
Finally, direct mail and e-mail also work well, he said. "They reinforce the ads in the national and local trade publications by getting the marketing messages right into agents' hands," Rotole said.