Most insurance industry people reading this are probably chewing on the meaty issues under the surface, like policy language and wind-versus-water coverage and exclusions. But I'm thinking about how much has changed in our world since Allstate was known not for Mayhem, but for its protective “good hands”–and how in spite of its ubiquity, traditional advertising as we once knew it could very well become extinct.

The Allstate example–and another shoot-yourself-in-the-foot moment, AIG's announcement that they might sue the federal government because they're not happy with the terms of the bailout they were handed–all begs the question: Does the insurance industry have even a inkling about the disconnect between what they do and what they say–and more to the point, do they even care?

I spoke about this with brand strategist Tony Wessling, who regularly works with financial services clients.

In Allstate's case, the insurer clearly wanted to respond to the new speed of social media by quickly getting out a TV ad campaign centering on their response to Sandy, he said. Similarly, AIG designed its “Thank You America” ad campaign to resuscitate a venerable brand after the 2008 government bailout. But both misfired because of the “fragmentation” of their approach to brand.

“There's a really strange scenario taking place in the C-suite; they're not in step with either social media or traditional media,” Wessling said.

In the past, CEOs were heavily involved in the advertising process. Today, a VP or director might review a brand campaign, while the CEO is focused on keeping shareholders placated–especially in the case of AIG. Thus the disconnect. “The C-suite has become so obsessed with numbers versus being cognizant of brand”–even though brand awareness will ultimately drive more profits to the bottom line, Wessling said.

“If these companies aren't at all conscious about the way their message is coming out in such an offensive way, it's because they don't have a comprehensive brand strategy,” Wessling said. “If you apply (brand strategy) to all situations, whether it's business decisions or marketing, and make all decisions based on brand, your message will come out consistent.”

Of course, that would mean having corporate policy that's transparent and authentic–something that's in short supply in financial services. The irony, of course, is that the insurer/client relationship is all about trust, “but they refuse to make it part of the brand because they themselves don't believe it,” Wessling said. Instead, insurance is a “quo” brand–so accustomed to the status quo that its leaders believe nothing can and should change.

It doesn't have to be that way: in the banking sector, Simple is a start-up bank branding itself as a “bank that doesn't suck.” For insurance, another innovator is Camico, a liability insurer for CPAs. “Camico's premiums cost more, but their customers love them; they have a 98 percent retention rate, even after a ratings downgrade,” Wessling said. “They are relentlessly focused on brand and customer happiness; we don't have a lot of that in the property-casualty world.”

Of course, Esurance was an innovator when it was launched–until Allstate bought it, turning it into yet another quo brand, Wessling said.

“Allstate isn't doing Esurance any favors,” he said. “There is innovation in this sector, but the financial might of the quo brands swallows them up before they can disrupt the industry completely.”

So is most of today's insurance branding just a case of putting lipstick on the pig? The short answer is yes–unless insurers begin to recognize the difference between traditional advertising and social media. Traditional advertising is a monologue–social media is a conversation.

Of course, many independent insurance agents–the guys on the front lines of the process–fully understand the importance of that conversation, and are doing creative things with video and social media. ”That's a great thing, and that's really what's missing,” Wessling said.

To build a trusted and transparent brand, insurers should include “everyone in (their) ecosystem”–including agents–to voice authenticity and enhance brand strategy, he said.

“Agents know they're dealing with their friends and neighbors, that deep human needs are to be respected and that the insurers can be viewed as somebody who helped them through a crisis,” Wessling said. “Agents need to pressure the parent companies to provide them with the tools they need to achieve this…whether it's proprietary mobile apps to write claims and document damage, which will help project the brand image.”