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Branding v. Reality: How the Insurance Business Overcomes its Stigma
  by:  |  Feb 20, 2008
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Last updated on September 22nd, 2017 at 11:03 pm

I just wrote an article for the Mesriani Law Group’s Blog about the the way that insurance companies operate in regards to dealing with automobile accidents.   What most people are not aware of is the fact that insurance companies are not designed to insure you in the event of a loss.  They are set up to avoid paying their insureds for losses.  This is something that most people do not find out until it is too late.

The pertinent question here is: why don’t people know any better?  The answer is in the manner that insurance companies advertise and brand themselves.    The insurance industry has been very careful to present itself as a caring entity which exists to help its insureds in the event of a loss.  Think about insurance advertising for a moment.  How many times have you seen a commercial where happy policy holders thank their likable and sympathetic insurance broker for helping them?  Between those images and catchphrases like State Farm’s “like a good neighbor, State Farm is there,”  these commericals are designed to create trust in the viewer and paint the insurance company as a friend.

As people are becoming more savvy to this manipulation, insurance companies are heading in a new direction:  making insurance entertaining and fun.   The recent trend has been to use visually unique advertising characters unrelated to insurance to keep the viewers watching.  Geico’s Cavemen and the animated commercials for Esurance.com are examples of insurance companies creating entertaining commercials and essentially hiding the insurance information in them.  For example, as the pleasingly drawn Erin Esurance fights spies or plays a futuristic version of football, random bits of information about how to use the Esurance site are slipped onto the screen and into the voice over.  The Geico Cavemen have been such a successful advertising tool that the ABC television network actually bought a sitcom pilot based on the concept and the show made their Fall line up last year.  Neither of these concepts has anything to do with insurance, but they have increased the visibility and likability of their brands considerably.

But is all this smokescreen styled advertising working?  According to this brand equity study on Branding Strategy Insider, it is arguable whether it does or doesn’t.  For example, according to the study, nearly two thirds of consumers have a preferred brand of automobile insurance.  But at the same time, over 80% of consumers state that their insurance company has disappointed them at some point.  Similarly, companies like State Farm have created an emotional bond with their customers, the overall belief is that though there are differences between the companies, those differences are not significant.

So what is the result at the end of the day?   While there is still an element of distrust of insurance companies, branding and smart advertising has helped the insurance industry maintain a position in the marketplace despite the sometimes cutthroat nature of its operations.

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