Latin Agents Urge Insurers to Join the Hispanic Market Explosion

As the Hispanic population surpasses 40 million with a combined purchasing power of more than $700 million, the insurance industry is keeping its eye on this ever-growing market segment. Hispanic agents and Latin agent insurance associations are playing an increasingly important role in representing minority agents and consumers, according to Enrique J. Ruiz, the newly-elected president of the Latin American Association of Insurance Agencies in Miami, Fla.

“Hispanic business, unlike regular business, has two things that make it very appealing to the general market,” Andre Urena, founder and CEO of the Latin American Insurance Agents Association, in El Monte, Calif., explained. “First, it’s about 10 points better in its loss-ratio than regular business; and second, in terms of population, we are exploding.

“Insurance companies are trying more and more to get into this market, but in my opinion there isn’t even one company that is getting it right,” Urena said.

Ruiz said words like “diversity” were rarely used 35 years ago. “Today, however, they are widely used. Many insurance companies have diversity programs … and while their intentions may be good, they fail to understand the true needs of minority markets.”

A new study by the Tomas Rivera Policy Institute showed that two-thirds of Hispanic families surveyed in Los Angeles consider insurance to be important protection against unexpected expenses and a tool to protect and grow wealth. The study reported that respondents owned property insurance in proportion to Latino home ownership rates in the Los Angeles area (47 percent). Personal contact is the preferred means of gathering information about insurance among Latinos and price is the dominant factor influencing insurance purchase decisions. In addition, perceptions of the respondents about insurance are affected by immigrant generation (foreign-born vs. native-born), and a majority of Los Angeles area Latino consumers prefer information about insurance in Spanish, or Spanish and English.

Associations educate agents
Ruiz, Urena and Dulce M. Suarez-Resnick, LAAIA Educational Committee chairperson and immediate past president, all agree associations play an important role in educating Latin independent insurance agents. They provide basic business needs, recruit employees, and educate and train employees and agency owners in the latest business practices.

Urena concurs that many large carriers want to get into the Hispanic market, but says most that have tried “failed miserably,” due to a lack of experience and appropriate market tactics.

“Hispanic insurance customers require face-to-face interaction, a lot of service and are service-oriented,” Urena explained. “Hispanic customers rarely want to deal with the Internet or 800 numbers. They want to come into the office, chat with their agent, make their monthly payment and pay in cash.”

Ruiz explained, “As we serve as counselors and educators, our responsibility grows and we must be prepared to be all things to all people. Companies expect us to be Anglo in our dealings with them, while customers expect us to be Latin.”

Ruiz said one of the most important functions of LAAIA is a commitment to give members the best educational programs available to polish their craft and further their knowledge so they can provide customers with the best possible service.

“Diversity should not mean higher risk to our partner companies; it should mean greater opportunity,” Ruiz explained. He said LAAIA works with its members every step of the way.

Penetrating the Hispanic market
Ruiz said companies with a strong distribution system with Latin agents in South Florida have done very well penetrating the Hispanic market.

“Companies like Progressive and Mercury have a strong presence among Hispanic agents and are doing well in penetrating the marketplace in South Florida,” Ruiz explained. “They could do more by using Hispanic media to promote their brands.”

Ruiz said many independent agency carriers talk a lot about participating in the Hispanic marketplace, but haven’t done anything about it.

“They fail to understand that if they want to sell to Hispanics they need to appoint Latin agents,” Ruiz said. “Without a strong distribution system they will never reach the Latin consumer.

“It’s important that they offer bilingual support to the consumer and strong claims service,” Ruiz explained. He noted that insurance carriers need to provide Hispanic agents with bilingual literature and customer service.

Urena said for carriers to effectively penetrate the Hispanic market they need to understand the market and brand their products as “Latino.”

“I receive calls from insurers trying to penetrate the Hispanic market,” he said. “I tell them the way to succeed is to train the agent in the street. He has to live in the same neighborhood and shop in the same stores–that’s where they need to be and that’s where they fail to see how they can penetrate the market.”

Urena suggests that the only way for a carrier to guarantee a share of the Hispanic market is to establish a completely Hispanic subsidiary.

“We need a Latino company, with a Spanish name called Azteca Insurance or Mexico Insurance so the Hispanic consumer can identify with it,” Urena said. “Such a company would train and market using Latin independent agents and put a Hispanic brand out there.”

Urena said Hispanic customers will respond to brand, but not if it is done by an Allstate, which he said spends a lot of money on Hispanic marketing and advertising, but has no Hispanic branding.

The need for Spanish brochures
Companies that don’t have marketing materials printed in Spanish don’t realize they need them and have not been told about it, Suarez-Resnick explained.

“Companies claiming to be working with agencies in diverse markets just don’t know where to start,” she said. “They haven’t targeted their market and don’t know what television, radio or print media to use in their marketing.”

In South Florida, Suarez-Resnick said Allstate has partnered with the Cuban-American Foundation to produce a 120-second spot on NBC-6 in which they present advice on life and financial service products.

“The president of the Cuban-American Foundation appears next to the Allstate agent of the day,” Suarez-Resnick said. “OK, Allstate is not an independent agent but it was a great idea. Why didn’t we think of it?”

Acknowledging market impact
Suarez-Resnick said carriers must take the first step and acknowledge the financial impact of the growing Hispanic market.

She said the Big “I” started its Diversity Task force six years ago to educate minority agents and provide them with access to large standard admitted carriers. Dulce said the task force is supported by Chubb, CNA, Hartford, Met Auto Life, Safeco, St. Paul Travelers, and Zurich. Agents participating in the task force luncheon, held Sept. 10 at the Big “I” Conference in New York, included African-Americans, Chinese-Americans, Latin-Americans and Japanese- Americans.

Southern California is a very competitive insurance market on its own, with several agencies on every block, according to Rafael Hurtado, one of the original co-founders of the California Latin Agents association. Hurtado says he tries to find a storefront with high foot-traffic so he can locate his agency, Net 4 Insurance Inc., in areas in which there are a lot of Latinos passing by. He sells property/casualty products at offices in Highland Park and South Pasadena.

Urena added that carriers need to provide clear notification of customer billing in Spanish and English and give the customer a chance to reinstate after they cancel, the longer they can reinstate the policy, the better. He also prefers to work with carriers that have easy to use software and employees that are compatible with his staff.

“Those are the kinds of things we look for and we also look for companies that are stable and have a good track record,” he said. “They need to understand our market. Infinity, Bristol West do a good job at that–but there is a lot of room left for companies to grow.

“We look at how much information they provide so the agent can sell and maintain the policy,” Urena said. “To our customers we are the company; to them there is no underwriter.”

Pinpoint the marketplace

“Companies need to pinpoint the geographic areas where the Hispanic population is growing, then make their product available to them,” Suarez-Resnick said. “How do you ask? Through professional independent insurance agents that are Hispanic. Contact the local agents association and obtain the names of agencies that can properly distribute the product.

“Face it, people want to do business with someone who speaks their language, someone they feel comfortable asking questions and they can trust. This business is all about relationships.”

Urena said Infinity and Bristol West are the most successful in California’s Hispanic market.

Hispanics obtain information about insurance from their friends and pay a lot of attention to television but TV advertising is so prohibitively expensive that it becomes very difficult for an independent agent to penetrate that market.

Urena said companies like the Infinity Insurance Group have been successful with cooperative radio, print and television advertising.

“Only companies that come to the Hispanic market and understand it before they make changes will be successful,” Urena explained. “Typically a company will hire a high-level executive that speaks Spanish and English and try to integrate him into the way they do business and then have that person come out into the market.”

He suggested that instead, they should have a person come to the market who understands the market, or learns the market and then goes and explains to the company what basic changes need to happen to accommodate business.

“If they don’t do that they will fail every time,” Urena maintained.

LAIAA caters to the Latino producer involved closely within the community, according to Hurtado. He said it encourages other producers who have locations in Hispanic communities.

Education key
According to Hurtado, education is a key function. The association holds continuing education courses before many of its regular meetings at which producers and their staff learn how to sell commercial, life, auto and other lines of business that will help them maintain their book of business. A lot of the courses are state-certified.

“The association is a forum to educate producers,” Hurtado explained. “Insurance carriers sponsor dinners and meetings held every month in Fresno, San Diego, Los Angeles and Palm Springs. The association branched out earlier this year to Las Vegas.”

Hurtado said the association diligently tries to bring as much updated information as possible to its producers.

“We have PowerPoint presentations with up to date information from carriers on how our agents should be selling particular products,” he said. “We provide up-to-date information on insurance-industry changes and new bylaws.”

He said they bring in speakers and politicians who are making changes in the laws and often sit in on insurance-related meetings in Sacramento.

“We are constantly changing information and are always educating our members at our meetings and with information in our newsletter,” he said.

Hurtado said many carriers are attempting to tap the Hispanic market in Los Angeles.

“Having a solid competitive product is the key to tapping into the Latin consumer–it doesn’t have to be as much a name brand, but a name that can be trusted on the producer side of the market,” Hurtado explained.

He said literature in Spanish is very important. He said many companies are afraid to translate English into Spanish because of differences in the language.

Hurtado said Latinos tend to shop on a referral basis in insurance agencies near their home and rely on their family and friends to recommend an agent. He said that Latinos are starting to buy insurance from television ads and other commercial venues, but that it is not that large a market.

Hurtado said carriers should sponsor more focus groups and training seminars in which they can obtain feedback from retail producers so they know where they stand and what they need in order to sell to the Latino community.

“Latinos have tremendous purchasing power and we are now heading into the second and third generation, which are more receptive to buying insurance products,” Hurtado said. “They are savvier and have higher purchasing power.”

Topics California Florida Carriers Agencies Training Development