Partner-perfect insurance: a household name among South Florida Hispanics, Estrella Group Holdings hopes to branch out from auto insurance into life insurance
For 27 years, Estrella Group Holdings Inc. has carved a niche for itself insuring low-income Hispanic families’ automobiles. CEO Nicolas Estrella thinks it is time those customers had life insurance, too, and he hopes his Miami-based company can help provide it.
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Estrella Group partnered with Virginia-based insurance firm Genworth Financial Inc. and Pompano Beach-based insurance broker R.H. Jones Financial Services Inc. in late June. Estrella associates will offer Genworth’s life insurance products to Estrella Group’s approximately 250,000 clients around Florida. R.H. Jones will train Estrella associates to sell life insurance.
“This relationship will elevate awareness among the Hispanic community on the importance of having a financial safety net as part of a family financial planning,” Estrella says.
Awareness is low, according to insurance industry trade group Limra International Inc. While half of the general population in the 25- to 64-year-old age group with household income of at least $25,000 has life insurance, only one-third of Hispanics in that demographic do.
Estrella also expects the life insurance business will add another revenue stream to the company, which already includes car insurance services through Estrella Insurance Inc., Value Underwriters Inc., Centrex Premium Finance Inc., Star Casualty Insurance Co. and Estrella Insurance Franchising Corp.
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In 2004, those businesses brought in $126 million in revenue, says Estrella group vice president Richard N. Estrella, Nicolas’ brother. He hopes to sell life insurance policies to around 100 clients a month, but neither he nor Nicolas speculate how profitable they think the venture will be. Richard Estrella did say that a 35-year-old man can buy a $100,000 life insurance policy for $7 a month, and a 30-year-old woman can get a $500,000 policy for $14 a month.
“Prices are really not much out of line. A normal monthly rate for a 30-year-old is $15 to $20,” says Melissa Gannon, vice president at Jupiter-based Weiss Ratings Inc., which evaluates the financial strength of insurers. “Genworth is a strong company and will not hurt them [Estrella Group] or the policyholder.”
With Genworth providing marketing dollars and Estrella Group merely acting as a distributor. Richard Estrella says, “We don’t have any [financial] stake in this case.”
John M. Wellborn, Limra’s corporate vice president, says the practice of mingling auto insurance and life insurance sales is as old as dirt. “One good example is State Farm Mutual Automotive Insurance Co. Anecdotal evidence states if you offer a customer two lines of business, they become more loyal. Therefore I do not see any risks to Estrella,” he says.
Estrella, Genworth and R.H. Jones officials believe the low-income Hispanic market is ripe for life insurance. Up to 75 percent of Hispanic struggle financially when facing a death in the family, says Javier Ismodes, Genworth’s vice president of Latino marketing. Meanwhile, US Census figures show the number of Hispanics in the United States growing from around 35,622 to nearly 47,756 in 2010.
Genworth hopes potential customers will be more open to hearing about life insurance from a company they are already familiar with. “Estrella has a great reputation. They are a perfect partner to help us reach a big part of South Florida’s Hispanic population,” he says.
Estrella is no stranger to selling life insurance. His first dabble in the business came in 1976, when he worked as an agent for Ohio-based Provident Mutual Life Insurance Co. Two years later, he left life insurance for auto insurance when he opened Estrella Insurance Inc., which showed revenues of $100,000 in its first year.
Ismodes says the partnership may seek to offer life insurance to Texas’ and California’s Hispanic markets, depending on how the Florida venture works out.
Estrella has other plans for increasing business the firm does with current customers. Another new venture, Estrella Telecom Inc., will soon sell a pin-free long distance service and calling cards in Estrella’s 45 locations. A pilot program offering financial services such as check cashing, money orders and payday advances will open in stores in Hollywood, Hialeah and Davie later this year, leading Richard one step closer to creating what he calls “a one stop shop.”