The global advertising spending in the insurance industry reached $7 billion in 2019.
The figure accounted for about 2.7% of all US advertising spending, which is $240 billion.
Altogether, the acquisition cost is just about $20 per each person in the US or about $60 for the typical insurance-purchasing single person, couple or family. The Return on Investment (ROI) on lifetime customer is exponential, reports Forbes
How can they afford such exorbitant ad outlays?
The insurance companies have plenty of cash in the first place. And secondly, because it is a mature category, insurers must steal share from each other to grow.
Insurance is not a fun product, therefore, millennials do not argue whether Allstate or Progressive is cooler, the way they would for a Nike or an Adidas product, usually.
It is also a low-involvement product, one that is continually paid for without much consideration by the consumer. As long as nothing goes wrong retention rates stay high without switching, the report said.
In 2000, American auto insurer The Government Employees Insurance Company (GEICO) broke the traditional insurance advertising and introduced a unconventional campaign which the staid and conservative insurance industry had never seen before – filled with pigs, cavemen, googly eyes and, of course, a little green lizard that was first conceived on the back of a napkin.
GEICO's plan of injecting humor into the sleepy and conservative category worked, propelling the insurer to yearly market-share gains and forcing competitors to step up their game, the report also said.
Grab consumer attention
Insurer after insurer is now hitting the airwaves with character-driven campaigvns, from "Mayhem," to “Flo,” to “Professor Burke,” to “Emu and Stakeouts.” Some center their campaigns on celebrities, such as football players like Aaron Rodgers or Payton Manning.
Forbes said the goal is to grab the attention of consumers who would rather not think about, or even care about, insurance, certainly not at age 25 or 30.
There is an enormous overlap on the advertising, making brands indistinguishable. With zany humor, or irrelevant celebrities, ads are being made t it rivial. That is why the insurance companies have to advertise – all the time. They must buy share of mind to engage.
Free funeral
Contrast that consumer lack of interest with Emirates Airlines’ foray into the insurance industry, offering Covid-19 insurance. The airlines industry is trying all sorts of things from leaving middle seats empty, to requiring everyone to wear masks, to health checks at terminals – in order to instill confidence in passengers who may be leery of air travel amid the global pandemic,
Emirates’ insurance for travelers stipulates that if one of its passengers is diagnosed with Covid-19 during their journey, the Dubai-based airline will cover their medical expenses, up to €150,000 (about $176,000). It will pay €100 ($118) per day for quarantine costs – such as a hotel room – for up to two weeks, the report further said.
For worst case scenario, Emirates will offer €1,500 (about $1,765) for a passenger's funeral. The insurance is automatic with ticketing, effective immediately, and carries no fees for travelers.
Indeed, an interesting idea. It delivers share of mind on steroids. It demonstrates the integrity of the brand to the public, and it shows they have empathy for their customers and understand the current environment.
The premise of insurance for medical bills or quarantine is brave. It’s bold and cuts to the heart of the reluctance to travel and it does not skirt the emotions surrounding Covid-19 but tackle them head on.
The report further added that, however, the fact that the insurance includes a death coverage could be problematic. It could encourage the kind of mental imagery that an airline normally would not want associated with its brand.
Such kind of insurance is simply untried and carries the risk of reputational damage if it is not done properly.
However, there is no precedent where a brand offers burial services as an incentive. But Emirates should be applauded for assuming the risk.
At a time, when airlines are flying planes in 20%-30% capacity and even cancelling entirely to some airports, the strategy may be well timed, Forbes also said.
Risky times call for risky measures. The shock value of free funeral offer might be a clever strategy to prompt travelers start flying again, or at least think about it.
And yes, it is one campaign that nobody will complain even if it underdelivers on its promises, the report concluded.
