Insurance brands are well accustomed to storms. Helping customers protect themselves and the property they own during a disastrous event like a hurricane is part of their remit. However, there’s a new pressure system building in the property and casualty insurance category as a host of circumstances challenge brands to rethink the way they market themselves and the massive marketing budgets they command.
Climate change, bringing more extreme storms like the recent Hurricane Ian, for example, in parts of the U.S. has already been putting stress on brands. Now, these large companies, including Allstate, Progressive and State Farm, are also facing inflation and rising costs for claims, even as they attempt to court Gen Z. The next generation of customers thinks about insurance in wholly different ways than their parents and grandparents, forcing brands to reevaluate nearly everything about their marketing.
“You’ve got regular price inflation, you’ve got claims inflation, you’ve got consumers that are paying more for housing costs, food, fuel, gas in their cars, all of that stuff and you eat or pay your insurance—guess what, they’re not going to pay their insurance,” said Ellen Carney, principal analyst of application development and delivery at Forrester. “You’ve got billion-dollar marketing budgets and you want that marketing money to be paying off and it sure doesn’t sound like it is.”
Insurers are already making changes as they prepare for the future. Many brands have begun investing more in digital marketing and less in broadcast TV as they seek to better target customers. Some, like State Farm, are also experimenting with new marketing channels like the metaverse and gaming. Experts also say embedded insurance, a growing trend in which a non-insurance brand incorporates insurance services into the sale of an item, can represent both an opportunity and a challenge for existing insurance brands. Some automotive brands, such as Tesla, already offer insurance services, for example, and experts predict the practice will grow as younger consumers seek out convenience rather than brands. In most cases, traditional providers underwrite the insurance; Toyota, for instance, uses Toggle, part of Farmers Insurance.
“The brand that you’re going to remember is the retailer you went into or the car dealer—not the name of the insurance company until you have a claim,” said Carney. “This is a huge marketing problem of being an ingredient brand in the embedded insurance world.”