Mass marketing in the insurance field is the presentation of a selling message to induce a number of insureds at one time to purchase insurance policies. It has changed the traditional method of selling insurance on a one-on-one basis.
Mass marketing is advantageous in that it reaches insureds who generally have no access to their own brokers or agents. It also brings the policies to the insureds usually at lower prices than those charged in one-on-one sales because it reduces the “middleman” cost of agents.
Opponents of mass marketing assert that it has disadvantages because it may use scare tactics and gimmickry to sell volumes of policies of low value. Mass marketing also lacks the personal aspect that agents give to customers, such as helping insureds apply for the insurance policy. In addition, it may cause unlicensed persons or entities to act as agents in selling insurance without a license.
Mass marketing is generally accomplished either by the insurer and its agents through direct mail, radio, television, or publication or by cooperating organizations that solicit their own members or customers.
An insurer conducts direct mass marketing by associating itself, often through an independent agent, with another type of commercial business that has a large number of customers. The business in effect gives its approval of that insurer, as opposed to other insurers, to its customers.
Issues arise, however, in relation to the business’ collection of premiums from its customers on behalf of the insurer. The business usually bills the premium at the same time that it sends its own statement to the customer, sometimes on the same statement. Thus, if an insured fails to pay, the business is sometimes required to advance the premium to the insurer on behalf of the customer, who continues to receive coverage, without a convenient way of recouping the premium from the customer. Other arrangements avoid this issue by having the insurer’s premium bill merely included in the business’ mailings. Issues may also arise if an insurer attempts to have its insureds pay premiums through a credit card company because some jurisdictions do not permit such activity.
Mass marketing has contributed to the sales of insurance to certain classes of people, such as students, and associations, such as labor unions. The agency contracts differ with respect to class-based marketing as opposed to those involved with an insurer’s relationship with commercial businesses.
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