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Life Assurance
Sunday, January 1, 1989
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The sale of insurance by direct marketing has become an important facet of the industry. Many of the major insurers and brokers are involving themselves in mail order practices.
Cover via the post is currently available in several areas including life assurance, short term insurance including motor and household items and health cover. It is believed direct marketing benefits both company and consumer. The company adopts the role of the advertising agency. For one thing companies can sidestep the intermediary and save on commissions. Although there is the cost of the mailing list they use.
Crusader Life does all its direct marketing business via insurance brokers, in line with its overall marketing philosophy. The advantage for the consumer is that he is able to make his decision regarding insurance on his own, in the privacy of his home. There is no salesman to pressurise him into buying a product, although at the same time personal contact and individual contact is lost.
Bruce Howard, deputy GM marketing for AA Life adds, “It is a service which keeps the consumer informed of developments within the industry. Individual’s needs change all the time and what direct marketing does, is to act as a constant reminder of these changes.”
The idea started about seven years ago in South Africa. Among the early pioneers were AA Life and Crusader.
Today it is a very competitive market. Others involved include Auto and General (A&G), Charter Life, Commercial Union, Norwich, Sanlam, Standard General Life and Protea.
Having quickly proved its worth, it is clear direct marketing is a fast growing industry. A&G has two thirds of its current total business generated this way. Crusader states that direct marketing comprised an impressive 13% of total new business for 1988.
A survey run by AA Life in 1985 showed that for every two people that wanted their names removed from the list, eight wanted theirs included. Ways of completing a direct marketing transaction vary greatly. Some companies offer a complete package. The consumer is able to buy cover on completion of the application form.
Others offer cover on a trial basis. For just R2.00, a person is able to be covered for one month. If satisfied he can continue the policy.
Bob Rowand, joint MD of Crusader, refers to this as ‘raw response, followed by converted response.”
This is succeeded by a follow-up package. Sometimes, the advertisement is merely a contact medium. The advertisement is geared only to evoke a response from clients. A phone call thereafter will conclude the cover.
A&G is currently employing this procedure. Representatives of the company attribute this method to the complexities of the short term market. “No advert would be able successfully to highlight all the variables inherent in, say, household or motor insurance in a simple succinct message. This is why it is necessary for the client to phone up”, says Steve Klinkert, MD of the company.
Probably the most important success criterion is finding the right combination of people and products. Identifying the group and ensuring the right product for that group is essential. It seems that most companies have gone through a learning curve. As direct marketing came of age, so the selection of the target group went from a little guesswork to a science.
Now, more and more sophisticated products are coming to the direct marketing market almost on a weekly basis. Expected responses on the basis of media type and target market are scientifically calculated. And, because marketing costs can be carefully controlled as a result, prices for products are highly competitive.

Copyright © Insurance Times and Investments® Vol:2.1 1st January, 1989
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