"It’s so new we don’t have a name for it, so I call it 'mart insurance'", notes Erik Bleekrode, an Insurance Practice Partner with KPMG in Brazil. He uses the term to refer to insurers in markets like Colombia and Peru who sell small value general or life policies in grocery stores. "It could be an in-store kiosk staffed by an agent or the insurance product may just sit on the grocer’s shelf for the customer to help themselves".
For example, Alianza Seguros Colombia has packaged policies in a box or can, like any other consumer good, so a shopper can read the label and add it to their cart. They also sell birthday card policies, promoted as thoughtful gifts for loved ones. The shopper pays just US$2.50 for a greeting card that provides the recipient with a US$1,250 accident policy.
The idea isn’t just popping up in developing countries either. In late 2012, US life insurer MetLife Inc. began selling policies at 200 Wal-Mart stores in the southern US. Displayed on store racks in a simple package decorated with MetLife's cartoon 'spokes-beagle’ Snoopy, a one-year pre-paid policy with a US$10,000 death benefit has a US$69 price tag.
"This is an interesting way to bring insurance to consumers and make it more tangible and convenient", says Erik, observing that insurers in developing markets like Brazil must find ways to reach and educate emerging middle class families who are often underserved by the financial industry.
Erik cautions that mart insurance could be slow to expand, since insurers may hesitate to sell small ticket policies, which can be hard to price affordably due to unfamiliar risks, high claims and fraud costs, and the need to split commissions with grocer partners.
That said, some insurers might see the potential of mart insurance to build new customer relationships. "They may sell a policy through a grocer mainly as a marketing instrument to increase their brand recognition with consumers they couldn’t normally target", suggests Erik. "Then they can also sell larger ticket policies to that customer and turn a retail shopper into a long-term client."
As insurers look for fresh ways to build awareness and trust with consumers, we may soon hear cashiers bellowing over grocery store intercoms, "Price check on P&C policy in aisle five, please!"
- Which insurance products are suited to self-serve purchase on a retail shelf?
- Could 'mart insurance' be a viable distribution or marketing channel?
- How must insurers adapt their administrative and claims processes to manage the service and risk challenges of mass market retailer sales?