Will Gay Marriage Bring New Marketing Opportunities for Agents?

In business, change brings opportunity. And when it comes to states that have recently legalized gay marriage, some see a marketing opportunity in selling insurance products for wedded gay couples.

The “gay market” in the United States is huge, according to Texas-based Merge Media, which estimated the buying power of the lesbian, gay, bisexual and transgender (LGBT) community to be roughly $800 billion in 2008. In addition to being large in buying power, the LGBT audience tends to have a strong allegiance to a particular brand — something that insurance companies, which tend to focus on branding initiatives likes sports events (NCAA, NASCAR, the PGA, etc.) ove.

Merge Media, with a client list that includes BMW, Coors and Hotels.com, said 89 percent of LGBT adults are highly likely to seek out a brand that advertises in gay media, and three out of four have a strong preference for a brand that markets directly to them.

One in four LGBT adults reported switching brands recently to a competing company that supported LGBT. Plus, LGBT adults are far more tech savvy (twice as likely to own a WiFi laptop and three times as likely to conduct financial transactions online), are twice as likely to have a portfolio worth more than $1 million, and twice as likely to have an annual income greater than $250,000.

Five states – Connecticut, Iowa, Massachusetts, New Hampshire and Vermont — have approved gay marriage laws in recent years, and a same-sex marriage law will go into effect in Washington, D.C. next month. In all, 31 states have put same-sex marriage on voting ballots or referendums in recent years, and a number of states have adopted laws to allow civil unions or domestic partnerships, or otherwise extend some types of benefits to gay couples.

While marketing firms are enthusiastic about the potential of marketing insurance to gays and lesbians, it has not turned out to be lucrative for every agency.

Take Kevin B. Foley, owner of PFT&K Insurance Brokers in New Jersey, a state where the legislature passed a law recognizing gay civil unions in 2006. In response, many insurance carriers began emphasizing coverage for LGBT partners in civil unions. Although it’s most commonly thought of in terms of health insurance or life insurance, there are aspects of property/casualty lines where the recognition of a spouse is important, such as benefits for workers’ compensation or access to multi-product discounts.

Travelers, for which Foley writes personal auto insurance, wrote to agents in the state urging them to begin extending multicar discounts to LGBT customers who were in civil unions. Foley, who markets personal and commercial property/ casualty insurance saw an opportunity. He quickly placed an ad in a monthly publication targeting the LGBT community.

The ad ran 12 months, and included a specific 800 number to call for quotes so that Foley would be able to gauge its impact. “In 12 months, I had one call,” he said. “I don’t know what conclusion to draw from this anecdote, but I offer it for what it’s worth.”

Despite Foley’s experience, professional marketers say that reaching out to gay and lesbian couples will, in the long-run, have a measurable impact on a business.

“Studies consistently show that gay and lesbian consumers are far more likely to focus their spending on companies that sensitively and specifically reach out to them,” said Colleen Dermody, vice president of Witeck-Combs Communications, a communications firm specializing in the LGBT market.

“LGBT consumers place a high value on brands, including health insurance companies, that earn and grow respect within the community. LGBT consumers are among the most motivated to ‘vote’ with their dollars and to seek out brands they believe to be very friendly and supportive of the LGBT community.”

New York is one state where same-sex marriage is recognized. But so far, there hasn’t been any obvious marketing bonanza, said Tim Dodge, spokesman for the Independent Insurance Agents and Brokers of New York.

“I haven’t really seen any agencies making a big push in marketing for it,” he said.

Even in states where gays and lesbians are not allowed to marry, insurance agents are being asked to look at policies and policyholders from a standpoint that considers domestic partnership.

In Michigan, for instance, where gay marriage was banned in 2004, the state’s insurance regulator, the Office of Financial and Insurance Regulation (OFIR), began offering tips on buying insurance to state residents who have domestic partners.

“When buying insurance, domestic partners need to take a few extra precautions,” OFIR Commissioner Ken Ross said. “Asking the right questions before you buy can save you time and money.”

Many of the tips are things that agents already ask their clients to do. Among them: list partners as secondary drivers on auto policies, check for multi-car/multidriver discount, and ensure both partners are named on the deed, mortgage and homeowners policy.