D2C Lead Gen Pose Digital Challenges for Insurers

Aging insurance agents and the rapid growth of the online portions of the direct-to-consumer insurance distribution channel has many insurers rethinking lead generation and acquisition infrastructures, a new report found.

In the online sub-segments of the direct-to-consumer (D2C) world, leads come from Internet search engines, banner ads, email lists and pop-up ads and links based on browsing history.

The D2C channel’s sub-segments are made up of telemarketing, print collateral, direct mail, online direct, online lead generation, online aggregators and television; more than half of life and annuity insurers use five or more of these sub-segments to reach customers.

Some insurers – auto insurers notably – have adopted cutting edge of lead generation techniques.

Still, “Many carriers are still using lists and stacks (of leads),” said Samantha Chow, a consultant with Aite Group and author of “Lead Generation in Insurance: In Search of the Golden Leads.”

The widely circulated report explores an area of the industry that rarely gabs headlines, yet remains critical to the growth in the number of insurance policies sold every year.

What’s holding insurers back? Companies themselves.

“Firms must get away from the self-made systems to advance their marketing lead-gen efforts,” Chow wrote.

Burdened by an In-House Mentality

Seventy-four percent of insurers report they purchase their leads in-house. Another 16 percent use outside organizations to manage lead-gen purchasing and 11 percent report generating leads in-house without buying leads, the report found.

More than half of companies (52 percent) report paying a set price for a lead, 16 percent reporting using a bid process where power is vested with the insurer, and 32 percent said they resorted to another lead purchasing strategy, the research found.

Leads typically cost a few dollars.

Only 37 percent of insurers report they can route and prioritize leads to specific agents or call centers, while 21 percent report the ability to rout leads without the ability to prioritize them, the report found.

The majority (53 percent) use internal analytics to support lead scoring while 37 percent use tools from outside vendors.

As many as 53 percent of insurers report storing leads in custom-built databases, even as the cost of data storage has dropped.

“Insurers like doing things on their own,” Chow said. “They want control. They don't want to give it to someone else.”

Millions of New Prospects in a Changing Landscape

Life insurers, who face stagnant policy count growth and low interest rates, are prepared to invest in better lead generation.

Compared with the past two years, 73 percent of 15 life insurers surveyed said they expect their lead-generation budgets to increase over the next year, the report found.

New opportunities to sell to clients aren’t lost on insurers and new technologies are available to reshape how insurers approach digital lead generation.

Millions of individual buyers have entered the marketplace for health insurance under the Affordable Care Act.

Millions more baby boomers are pouring out of group plans and shopping for individual policies to supplement Medicare protection in retirement.

Insurers have decades of experience mining age, gender, ZIP code and household income data, and leads are matched with insurers though bidding processes, said Jamie Pickles, general manager of insurance for lead tracking company Jornaya.

But where insurers fall short is in targeting specific customers, or understanding the digital “journey” of the sales lead before customers request a quote.

Tracking that history would help insurers target leads more precisely as the D2C channel’s sub-segments grow and insurers press to reach uninsured or underinsured life insurance consumers.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.