Global Market Segmentation Snapshot
The life insurance segment continues to offer ample growth potential both in the developed and emerging world. Since buyers of life insurance prefer products which offer good return and life risk coverage, insurers offering life insurance solutions have adapted their strategies and structured policies to comprise both features.
Globally, life insurance has emerged as an important insurance segment, which has not only enabled insurance companies to expand their geographical presence but also enabled banks to expand their overall product portfolio. In developed countries such as the UK insurance penetration rate as GDP contributor was the highest with 7.30% in 2012. However, France, Japan and the UK were the largest markets for life insurance pertaining to the high penetration level in life insurance.
On the contrary, life insurance penetration rate in the US in 2012 was recorded as 3.95%. Due to the high penetration rate in the UK, life insurer’s gets ample opportunities to target the customer segment by offering distinguished product offerings in their investment portfolio. Moreover, due to varied product offerings, customers are likely to choose between various options offered to them enabling a cut throat competition amongst the life insurer’s offerings.
In emerging economies such as India, China, Poland and Brazil, the life insurance penetration rate was recorded as 3.47%, 2.02%, 2.08% and 2.40% respectively. Life insurers in the emerging countries target the market by using technological advancements and innovative product offerings to attract the customers. Additionally, life insurance companies target customers on the basis of gender, demographic profiles and income levels. Technological advancements such as video enabled services and mobile insurance are some of the latest technological aspect covered by the life insurers enabling customers to directly visit the company website to purchase life insurance products globally. The company’s website includes a web chat facility through which customers can chat online with company representatives to get online quotes and proposals that are created immediately. Video enabled services also enable customers to discuss their options with these company representatives to get advice before purchasing a policy. This enhances the consumer confidence, as people generally prefer to get advice from financial experts before making financial decisions.
Branding and segmentation also plays an important role in life insurance segment as branding benefits the insurers with generating awareness of the product, creating brand value amongst the customers and restructuring of the insurance business in some cases resulting in structural changes in the business model. The repercussions of the adoption level of branding and segmentation strategies, however, result in development of the product in the target market creating revenues and adding value to the life insurance experience of the customers. In the developed economies, most adopted branding strategies includes rebranding and use of multi access channels such as mobile and video enabled services whereas in emerging economies, some of the popular branding strategies adopted by life insurers are expansion and collaborations strategies and use of social media for promoting the products and services along with offering a common platform for the customers to share information and seek guidance from the agents and representatives.
?
Key Branding and Segmentation Strategies
The brand value of life insurance companies have an important say on their market and scope of business. Branding is important not only to demarcate companies from its competitors, but also to build their reputation and credibility among customers. Life insurance companies in general tend to build their brand centering on the following aspects: highlighting the expertise they have in offering specialized services, highlighting their experience as an established brand, and highlighting the customized products offerings along with diversified portfolio in life insurance segment. Moreover, various branding strategies adopted by life insurance organizations are performed by focusing on domestic brand awareness and the goodwill it holds among its target markets.
Some of the strategies adopted by key life insurance companies existing globally in order to target their customer segment and the implications levied are as under:
Go deeper with GlobalData
Rebranding strategy to gain excessive market share and competitive advantage
Life insurance companies undergo rebranding strategies in order to build stronger client associations in terms of product offerings and defining a clear role of the products in the customer’s mind. This in turn fosters reliability and confidence resulting in gaining competitive advantage over its peers. Rebranding or restructuring performed by the life insurers under their life insurance segment in developed as well as emerging economies has been adopted by key life insurers aggressively resulting in creating positive implications for their business. Norwich Union and Hibernian in the UK rebranded its name to Aviva targeting the existing customers as well as retaining the old customers in the UK which have been associated with the brand in the past. The unified brand identity however impacted the life insurance segment with a strong brand presence, inculcating trust and confidence resulting in building profitability in order to remain sustainable in the market.
Similarly, TM Asia Life in Malaysia rebranded its name to Tokio Marine Life Insurance in 2010 targeting the niche customer segment such as women and middle class which results in strengthening and strong positioning of the company in the market. The life insurer is however offered with distinguished products to cater to the larger customer base.
Brand building through expansion and collaboration strategy
Collaborations and acquisitions occur in order to develop expertise in the product category, and to increase diversification and capabilities. In order to increase their market presence and foster industry growth, Japanese insurance company, Mitsui Sumitomo Insurance in 2011 acquired 26% stake of New York Life in Max New York Life Insurance as an overseas partner of Max India Group, thereby rebranding itself to Max Life Insurance following the new partnership between Mitsui Sumitomo and New York Life Insurance Company Limited. The step focuses on the greater market presence and acquisition of the existing client base in the Indian market since Mitsui Sumitomo Insurance holds strong experience and extensive track record in the markets of Japan, Thailand, China among others offering expertise in life insurance whereas Max New York Life Insurance comprise specialist agents and advisors in India. This offers ample opportunities for the insurers to extend their market reach internationally resulting in generating greater revenues and growth.
Brand’s online presence and internet marketing through social media and networking
Life insurers adopted various multi-channel accesses along with technological tools such as video-enabled services in order to extend online presence in delivering solutions. For example, Milife, which is world’s first mobile money m-insurance service offered in Ghana functions by using mobile phone during customer communication resulting in leveraging the insurance service with the use of mobile phone. Similarly, The Insurance Company of East Africa (ICEA) introduced mobile money premium payment option in partnership with MTN Uganda targeting existing customers to make regular payments for life insurance.
Moreover, the introduction of mobile money premium payment option removes the risk of handling and making payments through cash enabling accessible and efficient payments of the premiums by the customers. However, internet marketing and online presence results in creating greater demand for life insurance products since the changing lifestyles and greater use of smartphone resulted in improving accessibility and clarity of information, defining clearer roles to the target customer. Online medium also enabled the customers to be updated with accurate information through social media networking or webassurance channels.
Brand establishment campaigns for strong positioning of their brand
Life insurance companies undergo brand establishment campaigns and advertisements by using different tools such as print media, TV advertising campaign among others in order to create awareness about the brand in the target market as well as conveying a strong message to the customers regarding the brand value that the insurers hold. Life insurers such as BGL Group in France, New York Life in the US along with Swiss Life in Switzerland and Aviva in the US launched various campaigns between 2010-2012 where the purpose of the campaigns was to build a strong brand with existing global network in order to strengthen their market presence and positioning along with offering diversified investment portfolio.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataEmerging Opportunities and Future Outlook
The global life insurance segment offers immense opportunities as well as challenges in providing innovative life insurance products to their target customers. However, insurers have been focusing on the technological aspect and managing risk to capitalize revenues for business expansion, improving customer experience thereafter. Consumers demand for greater transparency needs in the costs and services associated while availing life insurance solutions resultantly requiring life insurers to implement non-commission sales model as distribution channels for the future. Additionally, technology enhances operational efficiencies of the life insurance business enabling the customer to invest in life insurance products enticing more investments and expenditures for life insurance segment globally.
In Asia-Pacific, regulatory framework governs the life insurance segment which furthermore leads to changes in company’s operations, business structure and their business models. Insurers are however; more discriminatory in entering new markets to expand scope and reach, while they utilize various distribution channels enabling them to manage costs along with maintaining productivity and overall development of the life insurance segment. Keeping pace with technological improvements has also fostered greater demand and growth in the services gained by the existing and potential customers in Asia-Pacific. Technology advancements and solutions offered through digital distribution channels such as social media networking and online marketing offering greater opportunities for the life insurers to target the untapped market segment and the upcoming generations. Significantly, rural market also produces abundant opportunities for life insurers since these companies are collaborating with various local bodies and Non government organizations to leverage the untapped customer segment.
In Europe, customers generally prefer transparency in availing products and services along with seeking satisfactory customer experience, bonus and incentive programs. Major regulatory changes lead to the reworking of the business models across European region resulting in changed business perspectives towards customers and preventing their investment portfolios by limiting their exposure to sovereign debt crisis enabling the insurers to formulate more productive life insurance products fostering growth for the companies. Major opportunities lay in offering simplified products to the consumers the products which the consumer can relate to enabling maximum profits through minimum investments.
In Latin America, long term growth in life insurance segment is fostered due to large number of insurance companies targeting middle class as well as young affluent. Life insurance companies embrace mobile technology along with leveraging digital distribution channels such as video enabled technology which enables the insurers to understand the consumer behavior and attitude towards various product offerings. Social media platforms enables the insurers to understand the type of product demanded by the consumers, the changes required in the product and understanding the basic requirement enabling them to redefine their strategies, policies and product offerings in Latin America. Moreover, flexibility, innovation and strategic alliances with non-traditional organizations also enhance both market positions and technical potency. The advent of technology enabled solutions coupled with online marketing strategies adopted by life insurers with various distribution channels have generated positive impact in generating future market opportunities and growth in the life insurance segment resulting in easy accessibility and reach fostering growth and sustainability for the life insurers in the industry.
