New York Life: How Traditional Approach Made for Great Marketing

This week, I got the May 24 issue of Fortune Magazine and skipped to this issue’s profile of one of the “World’s Most Admired Companies.” This time it was New York Life, the nation’s largest mutual life insurer. As I read the article, I was pretty intrigued by the company’s operation: very conservative. While New York Life is owned by policyholders, it didn’t follow the lead of other major insurers to invest aggressively for the sake of paying generous dividends. And the insurer chose to remain neutral in a price war on some lines of insurance, even though that meant losing some business in 2008. New York Life also invests in its own captive sales force – 12,000 agents strong – a practice so cost prohibitive to many publicly-traded insurers that they’re forced to rely on a network of banks, independent agents, and broker-dealers to push their insurance.

Fewer and fewer of us want to be viewed as traditional or passé, so one would think that New York Life’s conservative approach would have cost it a great deal of business. And in the go-go years, that seemed to be the case. But now, two years after a near meltdown in financial services, New York Life appears to have been vindicated: it had a record $15 billion surplus of cash in 2009; it has continued to pay policyholders dividends for the 156th year, and had an increase of 40,000 policies sold in 2009. Even better, it didn’t have to raise premium rates like many of its price war competitors.

Just look at the effective marketing system New York Life has built for itself. Recall the components of the marketing mix: product, price, position, promotion, and distribution. It’s easy to discern from the article that New York Life got all of these components right. While New York Life also sells mutual funds, long-term care insurance, and annuities, it has neither forgotten nor abandoned its core product: life insurance. In fact, the company still emphasizes it as an important part of a family’s protection. Because of its traditional investment style, New York Life’s pricing is competitive. In terms of promotion, New York Life turned its traditional operation into a distinct advantage, boosting ad spending by 24% and trumpeting how its conservative style was appropriate for these economic times. Distribution is handled through by New York Life’s own captive agent force – the only agents for New York Life, all New York Life, and nothing but New York Life. Every New York Life agent I’ve met knows its products backward and forward, and knows quickly which ones are most ideal for prospective and existing customers. Now positioning… New York Life apparently could market itself as the kind of insurance company that gives its policyholders great peace of mind. Policyholders can sleep at night knowing dividends will be paid consistently, premiums will remain stable, that they have the right insurance, and that the company will be around to pay out when they need to make a claim.

I am not a New York Life policyholder. I came very close a couple of years ago, but another company had a policy that was better suited to my needs. And I found it hard to reject the New York Life agent who had been working with me to find the right policy for me. But when my insurance needs change, New York Life is on my short list, a further testament of its marketing success: make a great impression on a prospective customer so that if he/she doesn’t buy now, there’s a good chance he/she will do so in the future.


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One Response to “New York Life: How Traditional Approach Made for Great Marketing”

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    […]New York Life: How Traditional Approach Made for Great Marketing « Insight Central[…]…

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