Contemporary Insurance Marketing: Selective Product Offerings
It seems as if too many insurers, managing general agents and program administrators these days, go with new product offerings predicated upon perceived profitability, rather than taking into consideration the product experience and expertise that has made them successful. It would also seem to the casual marketing guru that a more rational selection of coverages offered-predicated upon past successes, rather than anticipated results-would make greater sense.
For example, a plethora of certain professional liability lines has driven the market so soft that some coverages are now marketed essentially as "commodities." Price is king! But how many of those inexperienced insurers, and their equally novice administrators, are going to be offering the same "price is king" approach a year from now or two years from now? What happens with renewals? If the insurer that wrote the coverage at bargain rates two years ago is now "out of that business," it means that agents and brokers have to find new markets with competitive rates, or simply lose the renewal altogether.
But some program administrators go the other route. They seek to expand their offerings by selecting a class of business that represents a more natural extension of their own marketing expertise. <%=company%>, for example-a successful national program administrator for nearly a half-century-recently utilized their experience in the security guard industry by becoming involved with a cleaning (janitorial) maintenance program. While, at a glance, there might seem little to compare between security guard firms and janitorial services, there are a number of similarities that enabled them to make the transition smoothly.
Many security guard and janitorial service personnel work overnight on the premises of their clients. Whether it's a security guard patrolling or a janitor cleaning and waxing, effectively the fidelity exposure is the same and both business classes are now offered third party fidelity. Since both businesses also share similar liability exposures, the underwriting process doesn't have to be completely relearned.
Another similarity is that with both coverages, premiums are predicated on the number of employees on the payroll. Brownyard discovered years ago that by offering a "wage freeze" provision, it caps premiums so that better managed firms, with higher than average payrolls (preferred risks) are not penalized.