Delaware Business Insurance Update from CNC Insurance Associates Inc. "Dollars Spent on Ads Better Than Agents ? 10-23-13

The debate has been going on for a while. Are marketing dollars a better investment to gain new business growth, or are commissions to agents still the best way?  Well, a recent study should wake up agents and brokers. The Nomura Equity Research has published a study that GEICO has had better growth results with sales dollars going into marketing and advertising and not commissions to agents. GEICO who traditionally get new customers from direct marketing, is gaining ground on other top direct writer insurance companies, all without the help of agents. Advertising direct to customers has always been a threat to the traditional distribution system. Only recently has this  become more real than us in the agent community want to believe. Insurance is a complicated product and for a hundred years, agents have been the frontline to communication, education and sales of insurance. As insurance products are marketed more and more like commodities, the consumers perceive insurance as the same for everyone. This is simply not true, as I see everyday the complex nature of the insurance contract. Advertising dollars may be great for growing an insurance company, but agent commissions are great for educating the consumer. Only time will tell which is more important to buyers, knowing what they are buying or buying it at an ever decreasing price point.
Until next time be careful out there and know your risks.

G. Kevin Nemith,  President CNC Insurance Associates and the Small Business Insurance Center
Serving DE, MD, PA NJ & VA
www.cncinsurance.com
www.bizinsurancetv.org

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