Market expansion: as America becomes more diversified in areas such as race, ethnicity, life stage and income level, some savvy insurers are growing their bottom lines by targeting specific groups. Those who fail to do so may find themselves falling behind.

Stodgy. Slow moving. Old-fashioned. Those words are often associated with the business of insurance. Yet in the race to capture the wowing diverse American marketplace--and the growing spending of these diverse groups--some insurers are being called progressive, aggressive and even savvy.

"Companies like Allstate are leading the nation," said Luke Visconti, partner and co-founder of DiversityInc., which focuses on diversity and business through its magazine and Web site. "Some insurers are doing a good job [reaching diverse markets.] Others aren't doing any job at all. But I'd say companies like Allstate, State Farm and Prudential are doing a great job."

There's strong motivation for all businesses to reach out to diverse markets. Among people of color, the household income has risen twice as last as it has among white households in the past decade, Visconti said.

Seven insurance and financial services companies are included in DiversityInc.'s annual listing of the top 50 companies for diversity, which is based on a number of factors, including management commitment, corporate communications and supplier diversity. Citigroup is No. 3; Allstate, No. 8; Blue Cross and Blue Shield of Illinois, No. 17; New York Life, No. 21; Prudential, No. 32; Metlife, No. 35; and Chubb, No. 47.

"I think it's a very progressive industry overall," Visconti said. He also mentioned Safeco, which, while less well known to the general public, has been strong in its pursuit of diversity.

He said some insurers just now may be waking up to realize that their competitors "took off at the green light two or three years ago."

A new title has arisen for the executive heading the diversity charge: chief diversity officer. All of the top 10 companies in DiversityInc's list of the 50 most diverse companies and 88% of the entire list have senior executives for diversity who are either a direct report or one report away from the companies' chief executive officers.

Not being involved in diversity is a dangerous position for businesses, Visconti said. "No matter how you slice it, people of color are changing the American dream, and that requires insurance," he said.

As insurers have mastered the art of segmenting risks, they are becoming adept at segmenting markets, whether their aim is to reach out to a particular race, ethnicity or gender; people of a certain occupation or life stage or income level, or even college alumni. But how insurers approach the market and what they do to tailor their message varies from company to company.

Underserved Markets

It's not always easy to define underserved markets.

"From my point of view, all markets are underserved," said Phil Salis, vice president of the individual business market for Metropolitan Life Insurance Co. Life insurance penetration has fallen to 61% of adult Americans from 70% in 1984; and the average policy has fallen to $126,000, well below the $459,000 that experts say is needed.

"But are there specific markets of underinsurance? Absolutely," Saris said. MetLife has focused on four in particular: Hispanic, African-American, Chinese and South Asian, which would include countries such as India and Pakistan.

To reach the Hispanic and Chinese communities, MetLife is focusing on developing advertising in the appropriate language for cable television, print and radio.

"Our focus is education," Saris said. "The groups we are focusing on are the new immigrants, people who have been here just a short time. There's a gap in terms of people's understanding of insurance products. It's a big opportunity for us to help people learn the benefits of products and how important they are to managing their future."

Reaching Out

MetLife has translated several educational brochures into various languages, he said. "They aren't sales oriented, but educational material on retirement planning, life insurance, different kinds of life insurance, how to figure out how much you need. We've translated them into Chinese, Korean, Russian and Spanish, just to name a few. We want to provide unbiased guidance and advice and information about products that we sell," Saris said.

For the South Asian market, where most business is conducted in English, and the African-American market, MetLife works to develop "culturally sensitive advertising material that focuses on particular aspects of the culture and community," Salis said. Sponsoring local events is a key element of that outreach, he said.

For instance, MetLife sponsors the Hong Kong Dragon Boat Race in the New York area, which draws thousands of Chinese spectators every summer. It also lit up its New York headquarters building in red rights to celebrate the Chinese New Year.

"All the action or transaction occurs at the local level at a local community," Saris said. Of MetLife's 6,000 career agents, about 25% are considered multicultural. "It's a critical part of our strategy to have people in the community who are from that community. We want to have people who speak Chinese in the Chinese community. That's not to say you cannot be successful not being Chinese in a Chinese community, but it certainly does help."

He noted they haven't tailored the products, just the marketing message. "People's needs are basically the same. The difference is the types of products that different markets buy."

For instance, the Chinese market is characterized by having "very disciplined savers," Saris said. "They typically look at life insurance that builds up a cash value. Our Chinese producers are the largest producers of that product set."

Face in the Mirror

You want to have a diverse customer base? You'd better start by having a diverse employee and agent base, says Safeco.

"We want to mirror both the community and the agencies so that we truly do understand the need. We need to influence the thinking as it begins right here. The grass-roots efforts are the people of Safeco, making sure that diversity has a voice," said Eleanor Barnard, senior vice president of sales for Safeco Corp.

In 2004, Safeco increased the number of women and people of color in its independent agency base by 83%. About a quarter of its total agencies are diverse. Also, at the company, 36% of new hires in 2004 were people of color. The number in management grew 12.6%, in 2004.

"This isn't about shoring up the numbers," Barnard said. "People like to work with people who live like them, look like them and think like them. It's a trust factor. Marketing to diverse markets is like saying marketing to America. It's what we do every day."

She said Safeco will also sponsor events in local communities, such as supporting a local gay pride parade. Often, it's Safeco's own employees who propose the sponsorship and staff the booth--and not necessarily a salesperson, she said.

In addition to translating materials into various languages, Safeco has a 24-hour translation service available to help non-English speaking clients.

Filling the Void

Are there enough diverse agents trying to reach multicultural markets?

"No one knows the answer to that," said Barbara Miller-Richards, vice president of agent development for the Independent Insurance Agents & Brokers of America. "There's very tittle data on the number of minority agents."

However, the IIABA has launched a diversity task force, which holds educational seminars to help new agents meet the challenges of a diverse marketplace.

"There's a number of ways to reach the diverse marketplace. One of them is to work with agents already in those markets and help them grow their business. The other is to help our mainstream agents learn about emerging markets," Miller-Richards said.

"If your field staff making agency appointments is aware of the opportunities in these emerging markets, if it's part of their mission, it makes a big difference," she said.

Insuring Working America

One company views diverse markets not as a niche, but as its bread and butter. New York-based SBLI USA Mumal Life Insurance Co. was formed originally as the Savings Bank Life Insurance Fund in 1939 with the mission of providing affordable life insurance to people who previously couldn't afford it. The company converted to a mutual company in 2000, with the goal of expanding beyond New York to become a national carrier.

"We serve the people who are not served by the traditional insurance distribution system," said M. Nasim Ali, executive vice president for marketing and sales of SBLI USA."We look at the underserved as those with less than $75,000 per household, African Americans, Latinos, newly arrived Asians and women. In some places, it's also the mature market."

Ali estimates the company's "niche" market is 70 million people.

"The traditional agent has a tendency to go after the affluent market. Our market is the people who do not understand the importance of life insurance. Lack of education is one of the major reasons this market is underserved," Ali said.

Unlike car or home insurance, life insurance isn't mandatory. "For many people, the only time they find out they need it is if something happens and they realize they don't have the financial resources,' he said.

SBLI USA sells directly to consumers through banks, new retail customer centers and by having a call center to field incoming calls sparked by its in-language advertisements in ethnic newspapers, radio and television. The company is fully bilingual in English and Spanish, and customers can fill out forms in either language and speak to representatives in either language at any time. The company estimates it has more than 1,000 pages on its Web site in both English and Spanish.

SBLI USA doesn't have to hire actors to do its advertising. Its 250 employees speak 21 different languages, Ali said. "The biggest asset we have is the employees identify themselves with the underserved market," he said.

The company also designs simple, easy-to-understand products that are affordable, he said. "We have a simple-issue term product where there is no medical exam. The premium can be as low as $7.50 a month. We have a travel accident policy that's $3 or $4 a month,"Ali said. When the premium is so low, the company makes collecting the premium affordable by doing it quarterly instead of monthly, and can accept payments by check, credit card or electronic fund transfer.

The company also offers a permanent life policy to seniors 55 to 75 years old that is guaranteed issue and builds cash value. The policy has a reduced benefit if the policyholder dies within the first two years.

Also, the company often attends community events to answer questions and educate people about life insurance.

"We have a very strong message of optimism and opportunity. People believe in the American dream," Ali said. SBLI USA estimates it has 400,000 customers, and has grown its non-New York business by 21% in the past two and a half years.

Minority Report

In the futuristic movie Minority Report, electronic advertisements read the retinas of passersby, then tailored an individual message specifically to that one consumer. That vision of a one-to-one marketing message isn't here yet, but it's coming.

"With the availability of more data and more demographic information and the tools to sort through that in a cost-effective and even local level, marketers and companies are able to become much more targeted and focused in their offering" said MetLife's Salis. "It's a trend that's been going on for 10 to 15 years. It's a convergence of technology and being able to sort through the data that's available."

The insurance industry has an opportunity to do a better job of true marketing, Maria Umbach, vice president of life marketing for Prudential Financial, said. "Not just pushing products, not just explaining products and trying to sell them, but trying to understand the unique need of the market and segmenting the market according to those needs, then teaching them with messages. One size doesn't fit all."

The industry hasn't reached a level yet where there's a specific message for everyone, such as a 24-year-old Asian woman. "It's not that finely segmented yet, hut it is going toward more refinement vs. less," Umbach said.

Key Points

* Insurers are becoming adept at segmenting markets, reaching out to specific racial, ethnic or gender groups; people of a certain occupation, life stage or income level; and members of affinity groups.

* In the past decade, household income has risen faster among people of color than it has among white households.

* About 88% of baby boomer women have sole or joint responsibility for making financial decisions for themselves and their families.

Learn More

Liberty Mutual Insurance Cos.

A.M. Best Company # 00060

Distribution: Direct, independent agents and brokers, captive agents

Metropolitan Life Insurance Co.

A.M. Best Company # 06704

Distribution: Captive agencies

For ratings and other financial strength information about these companies, visit www.ambest.com.

At a Glance: Diverse Markets

Show Me the Money

Asian Americans Lead In Household Income

Asian Americans had the highest median household income in 2003.

[GRAPHIC OMITTED]

Latino Buying Power Surges

Latino buying power is growing faster than any other group's buying power through 2007.

[GRAPHIC OMITTED]

Room for Growth

African Americans and Hispanics in the United States did not spend as much as others on personal insurance and pensions in 2002.

[GRAPHIC OMITTED]

Top Diverse Companies

Seven insurance and financial
services companies made DiversityInc.'s
annual listing of the top 50
companies for diversity in 2005:

Citigroup Inc.: No. 3
Allstate Insurance Co.: No. 8
Blue Cross and Blue Shield of Illinois: No. 17
New York Life: No. 21
Prudential Financial: No. 32
Metlife: No. 35
Chubb: No. 47

Source: DiversityInc.

A changing U.S. Population

* By 2050, whites will be a minority.

* By 2050, Hispanics will represent one in four Americans.

* Hispanics are the largest and fastest-growing minority in the United States. The population of Hispanics (who may be of any race) grew 13% from 2000 to July 1, 2003, almost four times as fast as the rest of the U.S. population, 3.3%.

* The population of Asians grew 12.5% from 2000 to July 1,2003, more than three and a half times as fast as the rest of the U.S. population.

Source: DiversityInc. and U.S. Census Bureau

Minorities Are Under-Represented in Agencies

Insurance agency principals don't reflect the growing diversity of the United States in 2003.

[GRAPHIC OMITTED]

RELATED ARTICLE: Underserved majority.

while 51% of the U.S. population is female, one could view women as an underserved, yet hungry, market. Prudential Financial is targeting women specifically, said Mafia Umbach, vice president of life product marketing for Pru.

"It's interesting to call this a niche. Niche implies small and unique. The needs are unique, hut it's certainly not small," Umbach said. "Women make up more than half of the population, and take a dominate role in making household financial decisions regardless of whether they are the primary breadwinner. It's a very large market opportunity, but the market is quite underserved."

Prudential has studied the market by looking at the financial experience and behaviors of women. According to its study, 88% of female baby boomers have sole or joint responsibility for products such as investment accounts, annuities and life insurance.

While all Americans could use education on financial services and how best to meet their financial needs, women may be more open to pursuing education, Umbach said.

"It's not unique to women, but women respond better if they can self-educate ... It's like women asking for directions. They are willing to do that," Umbach said.

Prudential works with organizations such as the American Business Women's Association to reach women who are emerging affluent and who have financial responsibilities not just for themselves personally, but for their businesses and their families.

Pru also sponsors women-directed events and educational seminars on finances. Umbach suspects that women may be more open to cross-selling products too. "Women tend to have these enormous responsibilities for decision making and multitasking. They are juggling the needs of children, business and parents. Because women tend to be responsible for multiple aspects of the household, it does tend to lend itself to cross-selling," she said.

In addition to targeting women, Prudential markets to ethnic subsets of the market, mostly through in-language materials and advertising to reach nine different languages. The company is also gearing up to launch specific products targeting the gay, lesbian, bisexual and transgender community. "Our long-term care has done quite a bit there, and annuities and life are starting to follow suit," Umbach said.

Women Make Financial Decisions

About 88% of baby boomer women are solely or jointly responsible
for making financial decisions for themselves and their families.

Growing Wealth

                     2004               2002

               Solely   Jointly   Solely   Jointly

Investment
Accounts *      39%       49%      38%       32%

IRAs            33%       62%      38%       28%

401(k)s         41%       39%      37%       26%

Annuities *     35%       56%      35%       25%

                     2000

               Solely   Jointly

Investment
Accounts *

IRAs            35%       26%

401(k)s         37%       22%

Annuities *

Protecting Wealth

                     2004               2002

               Solely   Jointly   Solely   Jointly

Life
Insurance       40%       52%      44%       38%

Estate
Plans/
Trusts/
Wills *         35%       61%      39%       40%

Long-Term-
Care
Insurance       40%       52%      39%       27%

                2000

               Solely   Jointly

Life
Insurance

Estate
Plans/
Trusts/
Wills *

Long-Term-
Care
Insurance       34%       26%

Note: For comparison consistency, these questions
were asked of women ages 39 to 58 which is
equivalent to the 2002 women's baby boomer sample.

* Not asked in 200 study.

Note: Table made from bar graph.

Source: Prudential Financial

RELATED ARTICLE: Finding an affinity.

One way that Liberty Mutual Insurance Cos. markets its personal lines business is through affinity relationships with 7,800 different groups in the United States. From alumni groups to professional associations to various employers, if people have something in common with each other, they may find themselves with something in common with Liberty Mutual.

In the workplace, a Liberty Mutual sales representative will offer educational programs to employees, such as "Auto 101" or"Homeowners 101": everything you need to know about your insurance policy; as well as programs on identity theft, distracted driving, teen-driving safety and child-passenger safety.

Also, the employees will have a chance to buy a discounted auto or homeowners policy.

"It's really a great way for us to give something back to the community, and sell insurance," said Anne Herbster, vice president of affinity marketing for Liberty Mutual.

The company also will buy advertisements in the alumni magazines of 390 alumni associations, do events at alumni gatherings and send out direct mailings.

Liberty Mutual also will co-brand a product to reach a specific group. "Our message is the same, but how we communicate the effort and brand it may be different," Herbster said. The company has 1,000 co-branded Web sites, she said.

Not every group is worth forming a relationship with, and not every member of the group qualifies for coverage, Herbster said. "This isn't 'let's take everybody,'" she said. "There are things we look at, such as stability and turnover, to determine if it's a good market for us. A lot comes down on your ability to penetrate it."