For years, Hispanic consumers have had to settle for "Americanized" versions of a wide variety of consumer goods-financial services products included. But as the Hispanic population in the U.S. rapidly ascends, industry experts insist that insurers must adopt new selling strategies to fully capitalize on a ripe opportunity.By the year 2025, Latinos are expected to represent the largest minority group in the United States. And, as this growth emerges, some insurers have begun to customize products to meet the needs of this burgeoning ethnic demographic group.

Recently, insurers such as PacifiCare Health Systems Inc. and Nationwide Retirement Services have designed ambitious Web-based programs directed at capturing the hearts and wallets of Hispanic consumers living in the United States.

In April, Columbus, Ohio-based Nationwide Retirement rolled out a Web site designed to educate Spanish-speaking employees in its public sector insurance plans. The site, located at www.nrsespanol.com, provides advice on retirement savings customized for Spanish-speaking individuals.

Also in April, Cypress, Calif.-based PacifiCare launched PacifiCare en Espanol, a Spanish-language Web site, located at www.pacificarelatino.com, which offers health information and education in Spanish for the company's growing number of Spanish-speaking members as well as for the Latino community worldwide.

In a move to assist insurance agents who interact with Hispanic consumers, the International Asso-ciation of Hispanic Insurance Profession-als (IAHIP) was formed. The first ethnic-oriented association known to exist, IAHIP was created to enable Hispanic insurance professionals to access a variety of tools to better serve the Hispanic population. Agents who align with IAHIP can count on traditional support, but can also interact online at www.iahip.org.

Those who have a stake in IAHIP include several top-line insurers as well as Fairview Heights, Ill.-based technology provider Global Financial Technologies Inc. Hispanic Marketing Consultants (HMC) is on board to provide insurance companies with market research, product design, advertising materials and translation services.

But the IAHIP sponsors don't plan to stop with the creation of an association. By summer, the consortium plans to launc what they regard as the first "virtual insurance company" aimed at Hispanics.

Ethnic engagement

The idea behind the launch of IAHIP-and the imminent rollout of a virtual insurance company-was the culmination of many years of growing laxity on the part of insurers to effectively cater to ethnic minority groups, says Mike Conley, CEO for Global FT, which offers business consulting and software development services to the financial services industry.

It's a condition that can't prevail if insurers harbor any real desires to serve a booming U.S. Hispanic population base. "There are about 25,000 to 30,000 Hispanic insurance agents in the U.S.," says Conley, who also once served as the CEO of GeneraLife Insurance Co. "IAHIP provides a voice for these agents and ultimately for Hispanic consumers. The challenge of the Hispanic agent has been the inability to customize products for Hispanic customers."

One of those agents, J.D. Moya, has worked with such large insurers as F&G, West Coast Life and CNA. While these insurers were on the leading-edge of ethnic marketing ability, others that Moya associated with were not. In short, "there were no true professional insurance organizations that represent and understand this market," Conley says.

With Moya's input, Global FT developed the technology behind www.iahip.org, and Moya was named the association's first president. Now, the objective is to leverage IAHIP so agents will be able to properly market, both online and offline, to the 38 million Hispanics in the United States, Conley says.

"Traditionally, insurers target Latinos by translating their marketing programs into Spanish," he says. "They also 'dress up' their existing products and services and put them into Spanish."

These are bad decisions, he says. "Instead, insurers have an obligation to customize a Web site and customize an insurance offering to Hispanics because the circumstances of Hispanics are entirely different than mainstream consumers," he adds. "The lack of tailored products available to Hispanics has produced a great deal of mistrust among Hispanics toward U.S. financial service providers."

Launching IAHIP is just the first step in an ongoing effort to reach out to the Hispanic population. Global FT is in the process of developing a virtual insurance company directed at Hispanics as well. Working with several large carriers to launch the venture, Global FT hopes to have a virtual entity established sometime before the end of the year.

Conley says he hopes to secure financial backing from several insurers. However, if this financing doesn't materialize, several prominent Hispanic banking institutions are prepared to provide the capital outlay to make the venture work, he says. Over the past couple years, Conley has developed a handful of virtual companies in the United States, Canada and the Netherlands.

All systems go

Census numbers support the activity that's occurring in ethnic marketing programs for financial services. Over the past decade, the U.S. Latino population grew a whopping 58%, according to U.S. Census Bureau figures.

Moreover, Hispanic-Americans' spending power grows between 8% and 10% annually, which is much faster than the general population, states a report, "Ethnic Minorities, Financial Services and the Web," compiled by Boston-based Celent Communications Inc. Internet usage among Hispanic-Americans is regarded as underdeveloped, according to Celent. But because Web usage is so infrequent, Celent says that "the rate of Internet penetration (by Hispanics) is growing faster than any other."

There is also a growing network of entrepreneurs and small-business owners among the ranks of U.S. Hispanics, which provides insurers with a great deal of traction to market life insurance and other wealth management products, says Matthew Josefowicz, Celent research analyst and co-author of the report.

"Just as adding primary language call centers and ATMs became a competitive requirement in serving ethnic markets over the last few years, we anticipate that the primary language online services will become competitive requirements within the next two to five years," he says.

The best advice that industry analysts and others with expertise in ethnic marketing can pass along to insurers is that ethnic-based strategies have to be carefully planned and executed. Most insurers well-versed in ethnic marketing concur that the key to reaching minority groups involves more than converting marketing materials from English to Spanish.

"We believe communicating in Spanish, and not just translating, is a significant step in our outreach to the Latino community because many Latinos prefer health-care information in Spanish," says Russell Bennett, PacifiCare's vice president of Latino Health Solutions. "Whether they prefer English or Spanish, most Latinos want to be recognized and addressed as Latinos. With that in mind, we developed PacifiCare en Espanol in response to increasing demand for health-care information in Spanish that is both linguistically accurate and culturally appropriate."

PacifiCare performed gap analysis around its various customer "touch points" to determine how to make a Web site resonate with an ethic minority group, Bennett says.

"I met with senior executives to gauge their readiness for this project," he says. "After receiving their support, we basically began with a blank sheet of paper, and asked: When it comes to the Web, what are the topics that Latinos most want and need to know about?"

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