Part 1. The insurance industry’s branding problem
Costs of brand weakness: Slower growth and reduced profitability
Insurance has a brand problem. It is often regarded, with good reason, by those who work in the industry as a force for good in society. But trust – which underpins all brands – is often lacking for insurers. The value of insurance may be recognized in theory but it is not so widely appreciated in practice. This failure to build brand value has proven hugely detrimental to the insurance industry’s growth and profitability. Globally, insurance has failed to keep pace with GDP growth in the 21 st century. In the broader economy, intangible asset values have soared in recent years 1 and brands have played a major role in driving corporate valuations. But the value of insurance companies relative to more brand-dependent businesses has languished. The total value of the world’s top 100 brands in 2023, according to Kantar, a marketing data and analytics firm, was $6.9 trillion, down 20% on the prior year, but still up 47% on pre-COVID levels in 2019. Insurance companies accounted for only $71.4 billion, or 0.1%, of this total brand value. Apple, the most valuable brand in 2023 in Kantar’s estimation, was worth more than 12 times that of all the insurance companies in the top 100. Taking a wider view, the picture is not much better for insurance companies. Among the 500 most valuable brands in 2023 tracked by Brand Finance, another consultancy, insurers accounted for just 4% of total value, behind seven other sectors.
What is a brand? The word brand carries a variety of meanings. Many people identify it loosely with the logo of a company and use the words logo and brand interchangeably. Others recognize that marketing is designed to build brands and thus see brands as the products of such marketing efforts. When people talk about the GEICO brand or the Progressive brand in the auto insurance market, they will – most of the time – be referring to the impressions created by those brands’ avatars, the GEICO gecko and Flo. That is a reflection of the tens of billions of dollars that both companies have invested in advertising over the years, but also a tribute to the success of this advertising in creating a clear brand image for both companies. But many successful brands do not advertise and their brand strength derives mainly from the customer’s experience of the product or service being sold, and the positive word of mouth that experience generates. In this report, we will use a broad definition of brand that encompasses all the above. Under this definition a brand is the sum total of all impressions that buyers receive about a company or product. Brand equity is the extent to which all of these impressions will influence purchase decisions relative to a (hypothetical) unbranded company or product.
1. Brand Finance categorizes intangible assets into three broad groups – rights (including leases, agreements, contracts), relationships (including a trained workforce), and intellectual property (including brands, patents and copyrights).
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