The world’s top 100 most valuable insurance brands could lose up to US$100 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Insurance 100 2020 report. Brand Finance’s analysis shows that the insurance sector is one of the most heavily impacted industries globally and could face a potential 20% loss in brand value.
COVID-19 is undoubtedly going to wreak havoc on the sector in the coming year – both financially, as brands that already operate on wafer-thin margins are being drowned in claims, and reputationally, as brands which refuse to pay out COVID-19 related claims are risking potential irreparable damage.
Looking beyond the insurance sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
David Haigh, CEO of Brand Finance, commented:
“The COVID-19 pandemic is going to hit the insurance sector hard – Brand Finance has predicted that insurance brands could face up to a 20% drop in brand value and undoubtedly, we are going to witness revenue slowdown for all brands across the sector. Some brands should, however, fare better in terms of their margins, including the property and casualty insurance brands, as fewer such claims are expected during the far-reaching and ongoing lockdown period.”
Ping An’s Good Doctor primed for growth
Ping An has recorded an impressive 20% brand value growth to US$60.6 billion, extending its lead further as the world’s most valuable insurance brand. The brand’s commitment to expanding its portfolio and offering in the non-insurance and digital disruption space is truly setting it apart from its peers. Ping An is also the 9th most valuable brand in the world, according to the Brand Finance Global 500 2020 report.
Most notably, the brand’s foray into health technology through its Good Doctor service has propelled Ping An even further into a league of its own. With a staggering 315 million registered users and nearly 70 million monthly active users, as at the end of 2019, it has become the largest mobile medical app in China in terms of coverage. Despite COVID-19 impacting Ping An’s life insurance business, the sheer boom in registrations for Good Doctor should offset this loss.
Chinese Insurance brands dominate top 10
Ping An leads the way for the further 11 Chinese insurance brands that feature in this year’s ranking. With their total brand value reaching US$151.5 billion, China is home to the most valuable insurance brands in the world. With all 12 brands featuring in the 2019 ranking too, the relative stability of the insurance sector in the Chinese market is showcased.
Five Chinese brands feature in the top 10: Ping An; China Life (down 10% to US$23.6 billion); AIA (up 17% to US$18.2 billion); CPIC (up 31% to US$14.0 billion) and PICC (up 20% to US$11.0 billion). Their combined brand value equates to over 80% of the total Chinese brand value in the ranking, demonstrating the distinctive gap between the “Leading 5” Chinese insurance brands and their counterparts further down the league table. Competition between the top 5 remains fierce and it is unlikely that smaller Chinese brands will be able to compete with them in the near future.
With a brand value growth of 31% to US$14.0 billion and a Brand Strength Index (BSI) score increase from 68 to 78 out of 100, CPIC is the fastest-growing brand in the top 10 by brand value and brand strength. With no dramatic increase in marketing spend, CPIC has smartly invested in its sponsorship programme of the Chinese women’s volleyball team which has boosted the awareness and trustworthiness of the brand.
CPIC is currently in the implementation phase of its new CPIC Service, where the company will combine its brand management system with products and services, with the aim of providing a unique customer experience. This move should build CPIC’s brand recognition as well as nurture customer loyalty. The insurer will be looking to continue providing great service to support its brand and business growth as it builds up to its 30th anniversary in 2021.
Bold brand strategy decision brings in big bucks for Canada Life
Canada Life’s brand value grew by an astonishing 688% to US$7.8 billion - simultaneously jumping 72 positions in the ranking to 14th – and making it by far the fastest-growing brand in the Brand Finance Insurance 100 2020 ranking. This is largely down to the brave strategic decision by parent company, Great-West Lifeco, that consolidated its Canada Life, London Life, and Great-West Life sub-brands under a single banner, making the company a far sleeker and more focused operation.
Going forward, the Canada Life brand will require much less investment to operate and maintain than its previously vast portfolio of IP. It is a risk, however, that sometimes results in a net loss of customer preference and acquisition. Thus far Canada Life has been able to remain relatively immune from a negative impact on the bottom line.
Poste Italiane named sector’s strongest
In addition to measuring overall brand value, Brand Finance determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, Poste Italiane (down 6% to US$6.7 billion) is the world’s strongest insurance brand with a Brand Strength Index (BSI) score of 85.5 out of 100 and a corresponding AAA brand strength rating.
Poste Italiane has successfully leveraged its strong territorial network of over 12,000 post offices and its highly developed digital services to reach its 35 million clients in Italy, across its key business areas including logistics, banking, and financial services.
In response to the COVID-19 pandemic, Poste has demonstrated its commitment to communities through a series of measures, from the introduction of pension withdrawals in alphabetical order to avoid overcrowded offices, working with the nation’s law enforcement to help the elderly withdraw their pensions, and assisting with mask distribution. These actions are a clear example of Poste Italiane’s investment to build its brand in line with its products – improving consumers’ perceptions of trust and reliability which are essential for insurance, banking, and courier services – and hopefully emerging from the crisis with a greater brand equity than before.
David Haigh, CEO of Brand Finance, commented:
“Poste Italiane’s perfect combination of ubiquity, accessibility, world-class product offering, excellent reputation, and transparency, makes the brand the strongest insurance brand globally.”
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 100 most valuable insurance brands are included in the Brand Finance Insurance 100 2020 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Insurance 100 2020 report.
Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (0% brand value loss), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the severity of enterprise value loss observed for the sector in the period between January and March 2020
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.