On March 14th, I posted The Low Interest Rate Dilemma, which detailed how the current low interest rate environment is impacting the insurance industry. At the upcoming Life Insurance Conference, this is going to be a significant topic.
Low interest rates are affecting pricing, the price-value proposition of product offerings and a variety of corporate finance aspects of these companies. With regard to life insurance, some of the product offerings are rather complex financial instruments, but one commonality is that no matter how they are structured, they are negatively impacted by low interest rates. Generally, these policies invest policyholder premiums paid into bonds and other types of investment vehicles that pay minimal returns. That has the potential to pressurize the profit margins of the companies. Each company will have individual circumstances, but there is a collective sense of acknowledgement and concern about how to address the issue. With a great challenge, there comes great opportunity to create a beneficial solution.
There’s often no better way to get a company’s attention than through their finances. Numerous company initiatives are often examined when there’s a financial crunch. One of the areas where changes can be made is marketing. The marketing environment has gotten more complicated over the last two decades. According to the Distribion white paper “Email Evolution: The Times Are Changing”, the average newly minted marketing MBA in 1990 was only familiar with 10 marketing mediums. In more present times, the number of marketing channels that a marketing MBA would need to be familiar with expanded to 26, including a multitude of social and digital environments. In such a complex ecosystem, there’s a need for assistance. Assistance can come through the utilization of marketing automation. A marketing automation system, as a part of brand management software designed for a distributed marketing organization (often a structure found in insurance), does have the potential to provide a brand with greater cost containment.
Recent Distribion client survey data indicates the following cost containment results:
- 25% increase in marketing efficiencies
- 15% reduction in compliance costs
- 10% reduction in support/maintenance costs
Without focusing on generating new business, a company can improve their financial standing through use of the Distributed Marketing Platform. Without leveraging the solution, there could be a much greater need to generate new sales and in this low interest rate environment, there are challenges in that course. The Distributed Marketing Platform has had a proven track record in that area as well, so it can be a good fit for companies desiring an increase in new business.
Industry trends are relevant to the collection of companies within the space, and each company comes to the table with a different perspective. It’s important for companies to be keenly aware of what they can do to solve problems, such as the low interest rate dilemma. Multiple approaches can be taken, and what Distribion offers can help ease the pain of low interest rates.