Direct Marketing To Policyholders: A 'Win-Win' For Carrier And Broker

Easy Money. Since most direct programs still provide attractive compensation to the original or servicing agent, most view it as revenue they would not have earned without the program.

New Leads. We have seen many instances where a direct marketing program for something as simple as a rider generates calls and inquiries to the agent, resulting in new core product sales opportunities.

Key Issues for Consideration

Product Selection. It is important to assemble the right menu of benefits for the direct marketing program. The general rule with direct marketing is "the simpler the offer, the better the result."

Benefits that can be offered on a guaranteed or simplified issue basis are ideal. Term, accidental death, spousal coverage, guaranteed insurability, annuity rollovers and critical illness all offer high probabilities of success. Offering some benefits post-issue may raise underwriting concerns, but one often can address these by carefully controlling the timing and amount of the offer.

Also, while most benefits can be offered as a "stand alone" product rather than as a rider, our experience suggests that a rider configuration will yield two to three times the result.

Technology Requirements. To conduct direct policyholder marketing efficiently, a true marketing database must be deployed. It is hard to handle this type of "continuous stream" marketing with legacy administrative systems.

Additionally, because business rules and eligibility requirements often dictate policyholder marketing, a flexible rules engine should be deployed to allow the ability to test eligibility for a large number of policyholders easily and efficiently.

Distribution Channel Options

Direct mail, telemarketing (inbound and outbound), advanced premium statement marketing and the Internet all are viable direct marketing options. Each offers its advantages and disadvantages:

Direct Mail. This method is unobtrusive and, generally, will provide acceptable levels of profitability. However, direct mail is capital-intensive and the capital is required before the first policy is written.

Outbound Telemarketing. This method can generate very high response rates and profitability. If managed properly, telemarketing can be done with few customer complaints. It also allows you to make adjustments throughout a campaign based on experience.

Advanced Statement Marketing. With todays technology and sophisticated laser printing capabilities, marketing within the premium billing statement is more advanced than the simple inserts used in the past. In fact, this distribution channel is perhaps the most powerful because it combines personalization with low-cost economics. However, it does require modification to existing remittance handling processes.

These channels are not mutually exclusive. We have found that the most successful programs blend a combination of channels.

While direct marketing to existing policyholders does not address all of the challenges posed by traditional distribution systems, it can be a viable part of the solution.

Michael Levison is CEO of ReMark Americas, a unit of Amsterdam, Netherlands-based ReMark Group with offices in Atlanta, San Francisco and Minneapolis. You may e-mail him at [email protected].

Reproduced from National Underwriter Edition, April 8, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.