Misleading Marketing from Carriers Going Direct

Discussion in 'Life Insurance Forum' started by Brian Anderson, Sep 5, 2017.

  1. Brian Anderson

    Brian Anderson Executive Editor Moderator

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    Forum member James Tobin (screen name: scottstreet) contributed a commentary piece (link below) about questionable marketing tactics being used by some carriers when they go direct. He says while he understands their motivation for starting a direct channel, he has noticed some misleading statements that don’t sit well with him. From the piece:

    The marketing content is where things get dicey. See, the carriers can’t come out and say that your insurance will be less expensive this way, because it’s not. Insurance rate schedules are approved by the Department of Insurance in respective states. Therefore, regardless of who sells you a policy of like terms – an independent agent or the carrier directly – the price is identical.

    However, the online marketing for these consumer-direct products implies that because you are going direct to the carrier, you are saving time and money. Nothing can be farther from the truth. In addition to the cost being identical, the streamlined application procedure is generally the same. All going direct to the carrier does is make the carrier wealthier, and deny the consumer the benefit of multiple carrier options and experienced advice.

    Anyone else have an issue with this? And thanks to scottstreet for contributing the piece.

    Insurance Forums | When technology enables sleazy marketing practices
  2. somarco

    somarco That Medicare Guy

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    The old "cut out the middle man markup" trick.

  3. jdeasy

    jdeasy Guru

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    Interesting, the companies would like to get rid of agents and agent commissions?

    What a shocker!!!;)

    In other breaking news, water is wet!!:yes:
  4. Robert Barney

    Robert Barney Guru

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    After 37 years in the life insurance business I have witnessed a number of companies enter the "direct to the consumer" market, and have yet to see one success story. The fact is that life insurance is a "grudge" sale product. No one really wants to buy it (always a small number of exceptions that you can't build a business on) but most consumer have to have it explained and "sold" to them by an agent who has to go out and develop the sale.

    Some products begin life that way. When the vacuum cleaner was first introduced it was only successfully sold door to door. Why buy one of those expensive and noisy things when you could just take the carpet out to the wash line, and beat the dust out of it? But after many years of successful door-to-door sales, manufacturers were able to move their vacuum cleaners into retail stores where people would walk in and buy them without "selling" having to occur.

    I should mention I miss the old Filter Queen demonstrations with the free steak knives. But I digress.

    The idea that consumers will buy life insurance off the shelf is not going to work. It's the nature of the product. And most consumers are not getting financially smarter, thanks to our education system which won't teach kids the basics.

    And for companies, building an internal marketing system with heavy overhead costs, ends up with the company spending more, not less, to sell their life insurance products versus paying commissions to agents when the sale is made that way.

    And none of this even begins to underline the damage that a life insurance company does to itself, after it alienates all its former agents by going directly after the agent's customers. Once that happens, you can't unscramble that egg easily, agents remember.

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