Last year, advertising spending in the insurance industry reached $7 billion. This is an incredible figure as it accounts for about 2.7% of all U.S. advertising spending, which is $240 billion. Overall, the acquisition cost is just about $20 per each person in the U.S. or about $60 for the typical insurance-purchasing single person, couple or family. The ROI on lifetime customer is exponential.
How can they afford such exorbitant ad outlays? Firstly, insurance companies have plenty of cash. And secondly, because it’s a mature category, insurers must steal share from each other to grow. Insurance isn’t a fun product – Millennials aren’t arguing whether Allstate or Progressive is cooler, the way they would for a Nike or an Adidas. It’s also a low-involvement product, one that is continually paid for without much consideration by the consumer. As long as nothing goes wrong retention rates are stay high without switching.
In 2000 GEICO broke with the insurance advertising tradition and introduced a zany campaign which the staid and conservative insurance industry had never seen before – filled with pigs, cavemen, googly eyes and, of course, a little green lizard that was first conceived on the back of a napkin. GEICO’s gambit of injecting humor into the sleepy and conservative category worked, propelling the insurer to yearly market-share gains and forcing competitors to step up their game. Insurer after insurer is now hitting the airwaves with character-driven campaigns, from “Mayhem,” to “Flo,” to “Professor Burke,” to “Emu and Stakeouts.” Some center their campaigns on celebrities, such as football players like Aaron Rodgers or Payton Manning.
The goal is to grab the attention of consumers who would rather not think about, or even care about, insurance, certainly not at age 25 or 30. Therefore, there is this enormous overlap on the advertising, making brands indistinguishable. And the zany humor, or the irrelevant celebrities, make the ads trivial. That is why the insurance companies have to advertise – all the time. They must buy share of mind to engage.
Contrast that consumer indifference with Emirates Airlines’ foray into the insurance industry, offering COVID-19 insurance. Airlines are trying all sorts of things – from leaving middle seats empty, to requiring everyone to wear masks, to health checks at terminals – in order to instill confidence in passengers who may be leery of air travel amid the global pandemic.
Emirates’ insurance for travelers stipulates that if one of its passengers is diagnosed with COVID-19 during their journey, the Dubai-based airline will cover their medical expenses, up to €150,000 (about $176,000). It will pay €100 ($118) per day for quarantine costs – such as a hotel room – for up to two weeks.
And if the worst happens, Emirates will offer €1,500 (about $1,765) for a passenger’s funeral. The insurance is automatic with ticketing, effective immediately, and carries no fees for travelers.
It’s an interesting idea. It delivers share of mind on steroids. It demonstrates the integrity of the brand to the public, and it shows they have empathy for their customers and understand the current environment.
The premise of insurance for medical bills or quarantine is brave. It’s bold and cuts to the heart of the reluctance to travel. It doesn’t skirt the emotions surrounding COVID-19 but tackle them head on. However, the fact that the insurance includes a death coverage could be problematic. It could encourage the kind of mental imagery that an airline normally wouldn’t want associated with its brand.
This kind of insurance is simply untried and carries the risk of reputational damage if it’s not done well. There’s no precedent where a brand offers burial services as an incentive. However, I applaud Emirate for assuming the risk. When airlines are flying planes in 20-30% capacity and even cancel entirely to some airports, the strategy may be well timed. Risky times call for risky measures. The shock value of free funeral offer might be a clever strategy to prompt travelers start flying again, or at least think about it.
And yeah, it’s one campaign that nobody will complain if it’s underdelivers on its promises.