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Around the World: Cover Unites the States

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Insurance companies in the US are increasingly taking an approach to lead generation that is shutting out the country’s traditional big business of lead generation systems and strategies: partnering with retailers to leverage the retailer’s consumer reach into warm leads for life and health insurance products.

Costco, for example, is one of the largest membership wholesale big box stores (what the UK would call a superstore), with more than 40 million paying members in the US.

Ameriprise is marketing homeowners and auto insurance to Costco members, and Costco is also providing individual and group health and dental plans to its members in partnership with Aetna.

Aetna markets ‘wellness cards’ at retailer Best Buy, enabling buyers to access one of three of Aetna’s online health management programmes – smoking cessation, weight management, and stress management – without having to be insured by Aetna.

Another example, this one in South Africa, is the clothing giant PEP, which linked recently with Hollard Group, the country’s largest privately held insurance company, to market funeral coverage to its underserved low-income customer base. 

Walmart, one of the largest (if not the largest) retailer in the world is another big retailer taking the step of making insurance available to its customer base.

In the US, its stores and hypermarkets sell a wide variety of goods, from general household merchandise such as apparel and kitchen goods to groceries, home décor and, rather famously, firearms and ammunition.

Many also have on-site pharmacies, alcove shops such as hair and nail salons and movie rental stores, local bank branches (or at least ATMs) fast-food outlets, auto supply and flower shops.

Life Insurance in a Box

One item Walmart did not sell, however, was life insurance. This changed in October 2012, when it entered a partnership with MetLife, one of the largest global providers of insurance annuities and employee benefit programmes, to pilot a programme in its South Carolina and Georgia stores, where Walmart customers could buy ‘life insurance in a box’.

Here is how the programme works: Four different simplified-issue policies have been developed at two face amounts – $10,000 and $25,000 – for four age ranges (18 to 44, 45 to 54, 55 to 59, and 60 to 65), with premiums customised for each age range.

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The annual premiums range from a low of $69 for the low age range customer wanting $10,000 in coverage, to a high of $429 for the oldest age range customer wanting a $25,000 policy.

The boxes, featuring Snoopy and Woodstock (who else?), are available for customers to grab off the shelf. Inside each box is a prepaid card, which is the key to obtaining the coverage.

A Walmart customer who decides to buy the insurance takes the box to the checkout line, pays the one-year premium to the cashier, then takes the box home.

Once there, the customer calls a toll-free phone number on the back of the card, responds to six health-related questions, and if all goes well, that customer then has a one-year term policy.

For those who are covered, coverage expires after a year. Individuals who want another year of coverage would have to reapply and answer the same six medical questions, and then will be covered for an additional year.

A Novel Discovery

If the customer is declined, an innovative event occurs: the card in the box becomes a prepaid Discover card, containing the same dollar value as the premium paid, and can be used anywhere Discover is accepted.

This is a novel direct distribution strategy for an underserved lower-income market in the US. The sell is very simple: Walmart presents customers with these boxes.

Without the agent, the customer is free to read the material and make his or her own decision. Those who choose to buy the insurance in a box become, upon the follow-up phone call to Metlife, members of Metlife’s database, and so are available for possible upselling.

Such a strategy can be effective with those potential customers who would rather not deal with an insurance agent, find the whole question of life insurance confusing and/or who believe they cannot afford protection cover.

Metlife’s research has found that simplifying the sale as much as possible, enabling convenient access from a store with which many consumers are comfortable, might make it easier for individuals such as these to consider making such a purchase.

It is also a novel way to acquire new leads: ones that may not have come Metlife’s way otherwise.   



Copyright © 2013 COVER Publications. All Rights Reserved. Reprinted with Permission. www.covermagazine.co.uk/
 

Summary

Ever more insurers are partnering with big-box retailers to develop new markets for life and health insurance in the United States. 
  • disruptive
  • big data
  • asymmetric
  • simplified issue
  • middle market
  • alternative distribution
  • innovation