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Will the Improving Real-Estate Market Spark Another Insurance Ad War?

Nationwide Rolls Out Property-Insurance Spot, Plans to Divide Car and Home Insurance Ad Spending Equally

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Long overshadowed by the big-spending auto category, property-insurance advertising has started to grab some of the spotlight as marketers look to lure business amid the improving housing market.

Measured media spending on homeowner and personal-property insurance ads reached $118 million in the January-October period, which is already more than twice the $52.7 million spent in the category last year, according to Kantar Media. And the figure is likely to go up once spending in the wake of Hurricane Sandy is tallied. The late October superstorm prompted insurers from Allstate to State Farm to run ads reaching out to victims.

But the larger -- and potentially longer-lasting -- reason behind the uptick is the improving housing market, which is fueling new interest in homeowner and property policies. "Home construction is picking up," said Bob Hartwig, president of the Insurance Information Institute, whose mission is to improve public understanding of insurance. So "each and every new home that is constructed is going to be insured, and that 's a new property for the [insurance] industry to compete over," he said.

Another factor is that Geico and Progressive , which kicked off the auto-insurance ad wars several years back, have begun to put more attention on property policies. They offer those policies through outsourcing arrangements, said Meyer Shields, Stifel Nicolaus' managing director for equity research on property and casualty insurance. That could be prompting competitors such as State Farm, Nationwide and Allstate to defend their property insurance turf through more advertising. "You're seeing an explicit focus on the part of Progressive and Geico to ... bundle their auto and their home [insurance]," Mr. Shields said. So "their competitors might be a little bit more sensitive about their homeowners' business."

Ad spending on property policies still significantly lags auto insurance ad spending, which drew $1.7 billion in measured media outlays in the first 10 months of 2012, led by Geico parent Berkshire Hathaway. Berkshire spent $390 million, according to Kantar estimates. But insurers that underwrite multiple insurance lines are beginning to tweak their formulas to balance auto ads with spots promoting property policies.

Consider Nationwide Insurance, which is planning to dedicate roughly half of its ad spending in the first quarter on its homeowner, condo and tenant policies. The centerpiece of that effort is an ad debuting this weekend that will tout an option in which policy holders can get coverage that reimburses the full cost to replace destroyed or stolen property, rather than the depreciated value. The option costs a little bit more in premiums, and similar versions are offered by other insurance companies. Nationwide has long offered this option, but is advertising it now for the first time. The marketer also rebranded it as "Brand New Belongings," after previously calling it "extended replacement costs coverage."

"This is a benefit -- a product we can sell to people at a nominal cost that really makes a big difference to them," said Matt Jauchius, Nationwide's chief marketing officer.

The spot, by McKinney of North Carolina, will debut this weekend during the NFL playoffs. It is part of the insurer's new "Join the Nation" umbrella campaign that uses Julia Roberts as a voiceover and seeks to balance subtle humor with visual effects, vs. the edgier character-driven spots used by several competitors. "We use humor, too," Mr. Jauchius said. But it is "empathetic," he added, "going for a chuckle than really going for a hard laugh."

Nationwide also found that it is more effective to discuss a specific insurance option. In the past, the marketer used more of a general safety and security message. But the company found that approach, which essentially sells the concept of insurance, only served to boost category-leading competitors.

The largest writer of homeowners insurance is State Farm, with a 21.3% share, followed by Allstate (9.4%), Farmers (6.2%), and Liberty Mutual (5.5), according to 2011 figures cited by the Insurance Information Institute. Nationwide ranks seventh with a 3.75% share.

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