Insurance is a major player in the global economy. In 2012, premiums were 6.3% of global GDP, a total of $4.6 trillion, according to figures from SwissRe. However, the percentage of the economy represented by insurance, referred to as the penetration rate, varies significantly from country to country, depending on the wealth of the market and other factors.
The U.S. rate of 8.2% of GDP is in line with 8.6% for advanced markets as a whole. For all of Asia, it’s 5.7%, but that figure is misleading: advanced Asian economies pay 11.8% of GDP to insurance premiums while emerging Asian economies spend only 3%. Those emerging economies are of great interest to the global insurance firms, because they now are reaching income thresholds at which, typically, large numbers of people begin to consider purchasing insurance. But while income is an important indicator of openness to insurance, each country and each culture offers unique challenges.
For example, early movers into the Chinese life insurance market ran into a wall, writes University of Hong Kong sociologist Cheris Shun-ching Chan. In 1992, AIA, a subsidiary of AIG, created the first formal life insurance product for the mainland Chinese market. “They used a similar rhetoric of ‘love’ and ‘responsibility,’ as in the sales discourses typically invoked in the American life insurance market. However, this strategy was not well received in the People’s Republic of China, and the agents using it faced not only rejection, but contempt, suspicion, and even hostility.” That's because it’s taboo to discuss premature death in Chinese culture.
A local company, Ping An, exploded onto the market by presenting annuities and whole life endowment products that “were designed according to the locals’ habits of saving, their concerns about life during retirement, and their child-centered way of life,” Chan writes. (After China’s insurance market became more regulated in the early 2000s, domestic insurers moved closer to products and practices used by the global firms.)
Another region presenting an opportunity to insurers is Africa, where the penetration rate is 3.6%. Remove South Africa, which spends three-quarters of the continent’s total premiums, from the equation and the rate is even lower.
For consumers in Africa who have the economic stability to be looking beyond immediate concerns, the poor quality of governance, legal, and judicial systems in many countries can serve as a barrier to trusting formal insurance systems. South Africa’s insurance industry has seen growth through increased regulation. While there’s some industry resistance to regulation, it is broadly accepted as a means to stability and greater trust in the industry, according to research by PricewaterhouseCoopers. This pattern of reform is slowly rippling across Africa.
Beth Hirschhorn, executive vice president for global brand and marketing at MetLife, talked with Yale Insights about engaging new markets while drawing on the 145-year history and tradition of the company. “People around the world are very consistent in their views and problems, and their hopes and dreams for insurance protection,” she said. “That gave us enough to work with that we could come up with a global brand promise. Now, when it comes to execution, that’s where things get a little bit different and probably have to get localized.”
One part of that localization is how to use MetLife’s association with the Peanuts characters in advertising. “In markets like the U.S., we use these characters to create instant recognition that a message from MetLife is coming.” In Japan, where the Peanuts are famous but the company is not, they use the beloved characters as an introduction. And in places where neither party is well known, the characters help distinguish MetLife from other insurance companies.
Q: What are the challenges in building a global brand in the insurance industry?
Beth Hirschhorn: Building a global brand in any industry is a challenge, but I think the key is to see if the people that you’re trying to reach have more in common than they have differences. In the case of insurance, people around the world are very consistent in their views and their problems and their hopes and dreams for insurance protection. People want the protection that insurance products offer. But they all face similar barriers. They’re not sure if they can really afford or understand properly which product is right for them. Oftentimes, even when they buy insurance, they’re not completely certain they’ve made the right decision, and they all want to know, are they working with a company they can trust? So that gave us enough to work with that we could come up with a global brand promise. Now, when it comes to execution, that’s where things get a little bit different and probably have to be localized, depending on either what you offer in that market, how you offer it, or cultural differences.
Q: What are some of the difficulties expanding into new markets?
Hirschhorn: Are there markets where we can’t enter? There are some barriers to market entry where you need licenses to enter the market, and there may be a limited number of licenses. So, any particular carrier can’t necessarily just say, “Hey, I wanna go into business here whether there’s a market there or not.” So, there are some regulatory barriers. From a cultural acceptance of products, the continent of Africa is not deeply penetrated in terms of insurance, so I think that’s an area that’s longer term in nature. There’s a lot of interest among insurers in expanding in Southeast Asia. So, I think that’s next on the horizon.
Q: How do you keep a brand with an identity established decades ago fresh?
Hirschhorn: The MetLife brand is 145 years old this year, so that’s a plus. And the question is: How do you take advantage of your history? How do you take advantage of your heritage? But how are you still relevant to solving whatever problems your customers have today? I think when you put those two together, you can come up with something pretty good. In MetLife’s case, we want to hang on to our financial stability—our proud heritage—and it’s not easy for any company to stay in business and really thrive for 145 years. So that gives our policyholders and our customers a lot of optimism and confidence that they’re with the right company.
So, we’ve been financially stable for decades and decades. Now, the question is: Are we serving people today in the way that’s right for them? And that’s what you have to continually update—how you engage with customers. So, whether in today’s era we are expanding our online distribution, or we’re updating products to meet whatever’s going on in the world today, that’s how we have to stay fresh. That’s how we have to stay relevant, but we don’t really want to lose sight of what made us so good in the first place.
Q: As MetLife expands globally, how will it also pursue continued growth in the United States?
Hirschhorn: The U.S. market is one of the most penetrated markets in the world for life insurance. Not the most, by the way; Japan has much greater insurance ownership than the U.S. does. But, where there’s an opening for expansion in the U.S. is, amazingly, among younger people—people in their 20s and 30s. And, there’s plenty of people who’re in their 50s and 60s who have insurance, but less so among younger people. So, that’s what we have to kind of get back. And to do that, we have to change the way we’re offering our products and services—again, like I said before—to be more relevant to younger people. We need new ways to meet the needs of customers, and that means being available online, being available by phone, and a whole host of other changes to the customer experience.
Q: How does the use of the Peanuts characters vary from market to market?
Hirschhorn: In the U.S., the Peanuts characters are very well known, and the connection between the Peanuts characters and MetLife is very close. So, in markets like the U.S., we use these characters to create this quick, instant recognition that a message from MetLife is coming. And it’s a nostalgic feel. We like to use the characters, too, to note approachability and not being so staid and standoffish as some insurance companies are thought to be. So that’s a U.S. version.
In Japan—let’s take Japan for example—that’s a place where the characters are very well known, but MetLife is not as well known. So that’s the market where we want to take advantage of the fact that the characters are very beloved, and we want to create that association with MetLife. Then you have markets where neither party is very well known. And in that case, the value we get from the Peanuts characters is kind of having something that’s new and different and doesn’t look like every other insurance company. So, depending on what the market recognition of the brand is, and the market recognition of the Peanuts characters, that tells us how we utilize the best to our advantage.