Archive

For July, 2011

Jul 28

On-line Marketing Options for Insurance

By Insurance-Canada.ca BlogEditorNo Comments

Ok, so you’ve decided to do some on-line marketing.  Why not run an ad on Goggle.  That’ll work, right?

It likely will, but bear in mind, you’re about to join a very expensive club.  According Wordstrem,  a company which tracks advertising on Google (quoted in Wired),  If you are looking to use the word ‘insurance’ for click throughs to your site, you will paying the MOST for advertising on Google:  “Insurance, where companies eager to outbid their rivals for new customers pay Google more than $54 for a click.”

Well, you might say, if that’s what it costs, that’s what it costs.  What are the alternatives?

Simply put:  Inbound Marketing.  Instead of reaching out to customers through advertising, get your customers to come to you.  That’s where Social Media comes in.  Here are some data that were recently posted in a LinkedIn discussion group devoted to use of Social Media in Insurance:

Financial services’ use of social media for business

  • Managed assets of social media users grew at a higher rate of 19% vs 6%  (Aite 2009)
  • Revenues of social media users grew at a higher rate of 19% vs 6%  (Aite 2009)

Of course, this all assumes that you have started to use Social Media and understand the environment.  As we’ve noted elsewhere, while Insurance is a natural fit for Social Media, the uptake by the industry has not been high.  However, there is growth and there is help coming.

Insurance-Canada.ca is planning to share information to help understand the options and make decisions.  Stay tuned to this blog and our Social Media page.

 

 

Jul 25

Software Selection – Value of a Disciplined Process

By Bill Garvey Eastern Shore ConsultingNo Comments

The hardest challenge I face is convincing insurers that a methodical software search yields the most favorable decision.  I understand the pressure; the business is losing ground, service is suffering, we’ve waited too long already…but every insurance executive with whom I speak recognizes that hasty decisions lead to disastrous results; and many of them are living with those poor choices.

A company I worked with in the Midwest was ready to follow a more disciplined process.  They hired me on to instill a thorough search methodology across the organization – and they followed it for Life/Health and Property/Casualty software searches.  The results were resoundingly successful.

I’ve had as many software acquisition failures as the next insurance guy or gal, but I’ve learned that success comes from following a process, weeding out the chaff, trusting my business drivers, averting the pitfalls of kneejerk decisions and negotiating from the position of strength that a competitive search brings.

If you’re ready to make a change in the way you go about selecting operational software, or have never been down this path, read more…

Bill Garvey (billgarvey@easternshoreconsulting.ca) has held senior level management positions in Operations and Information Technology for insurance carriers across the United States and Canada. Eastern Shores Consulting, provides consulting for the Property & Casualty as well as the Life & Health Insurance Industry for Policy Administration, Rating and Billing operations.  

Jul 21

Social Media Importance and Priority – Executive (mis) Alignment

By Insurance-Canada.ca BlogEditorNo Comments

We recently commented on the frequently negative impact of corporate culture on the use of Social Media in business.  Recent research reveals another dysfunctional aspect of corporate activity: mis-alignment between business executives’ understanding of the importance of Social Media and the priority Social Media is being given within their organizations.

As reported in eMarketer, a recent study from Jive Software and Penn, Schoen & Berland found that  36% of executives believe that Social Media is very important to the future success of their businesses.

However, only 27% felt that Social Media is a strategic priority.

Interestingly, when looked at by size of organization, the medium sized group seemed to have the best alignment, with 51% of executives seeing the issue as very important and 49% giving it strategic priority.

It is hard to picture how this type of mis-alignment would serve any corporate goals.

Jul 18

US Independent Agent Strategies Strive to Retake Personal LInes Business

By Insurance-Canada.ca BlogEditorNo Comments

There has been an erosion in personal line market share market share by independent agents and brokers in the US and Canada.  We commented recently on recommendations that the Independent Insurance Brokers of Ontario (IBAO) provided on the use of technology to reverse the trend.  The Independent Insurance Agents and Brokers of America (IIABA) has launched its own information campaign on the same track.

Jeff Yates, Executive Director of ACT (Agents Council for Technology), a division of IIABA,  has issued two position papers on the topic, both of which are available on the ACT website (IIABA.net/act).  One, Sales and Servicing Strategies to Grow Your Agency’s Business, focuses on causes.  The other, The Independent Agents’ Opportunity to Take Back Personal Lines, concentrates on strategies an independent agent can take.  We summarize some key findings below.  For  anyone interested in preserving the role an independent distributor plays in personal lines insurance, both reports in their entirety are worthy reads.

Yates summarizes 5 studies to get to the causes.  In essence, consumers are finding alternatives to independent agents and brokers that are more convenient and possibly less expensive.  Yates writes in ‘Sales and Servicing’:  “The top five reasons given by consumers for not using a local agent were:

  • I found it more convenient to use a website or 24 hour toll free number—29%
  • It was faster to purchase online or via a toll free number—28%
  • I got a quote online and decided to purchase online—26%
  • I prefer to use a website or toll free number—20%
  • It was cheaper to purchase online or via a toll free number—20%.

Yates contends that independents are positioned to use existing sales skills combined with existing technology to leverage these preferences in the direction of the independent’s office.  He notes that while a  “J. D. Power & Associates has reported that 2010 was the first time a majority of insurance shoppers (54%) initiated their policy purchase process by applying for a quote online,”  the same survey finds that “50% of these online quotes, however, still are closed by an agent or call center representative.”

Yates believes that independents  can benefit from the consumers’ preference to compare price by employing current technology.  In ‘Opportunity,’ he writes: “The technology has now become available to enable independent agents to enter the online shopping & quoting space effectively. … Independent agents can implement online consumer portals on their websites offered by several comparative rating vendors to provide consumers with online quotes from multiple carriers and should do so. Agencies using these tools are achieving a close ratio of 35% to more than 60% by promptly following up with consumers on quotes.”

But this isn’t a free ride for independents.  There needs to be consistent attention to technology as well as customer service.  Yates concludes:  “The bottom line here is that a lot of auto insurance business is currently in play for independent agents to attract and that most online shoppers still go offline to purchase. Agents, however, need to have a strong online presence so consumers can find them, along with the ability to offer quotes online.”

 

 

Jul 14

Modern Claims Techonology Benefits Run Deep and Long

By Insurance-Canada.ca BlogEditorNo Comments

There is increasing evidence that investments in modern claims technology may be one of the best strategic decisions insurers can make.

We recently wrote on the competitive benefits that can accrue from the improvements in customer service derived from modern claims systems.  Not only are customers more satisfied (improving retention), but, as Celent’s Donald Light commented recently, the process can be shorted for everyone.  “The claim handler or adjuster has to rely on technology to see the whole process and where the claimant is in that process, and whether he or she might need to push a certain part of the process along,” Light commented.

CNA found that modern technology allows a comprehensive view  of the process and data  can be extended to the whole portfolio of claims, to ensure that the right people are handling the right processes at the right time.  Moreover, the same, correct information can be provided to all interested parties (including underwriters, actuaries, and marketing staff)  in a timely fashion.  According to Becky Nelson, VP of IT, (reported in Insurance & Technology) “This will be accessible to many more people than in the past, when we have had to gather the information in different ways through different channels.”

Analytics offer increased opportunities to not only react to claims, but determine proactive strategies to address complex problems.  There are a significant number of variables in fraud management.  New techniques, such as link analysis and visual analysis of large data sets are allowing detection and penetration of fraud rings.  It’s pretty esoteric stuff, but it is showing promise in addressing complex, previously insoluble problems.

Last, but not least, modern technologies in the claims department fast tracks people on the systems learning curve.  For smaller organizations such as  Narragansett Bay Insurance Co., a Rhode Island based specialty insurer, this can be especially important in handling spikes in activity due to events such as hurricanes.   Quoted in Insurance Networking News, Bob Khosropur, chief claims officer credits modern technology for  allowing causal users to become proficient in gathering information during these periods:   “We have to ensure that our phone lines never get choked-that they’re able to take in as much as the demand calls for in terms of service, and have someone at the end of the line who can take all that information from the policyholder and populate our claims systems with every bit of information needed to begin the claims process.”

 

Jul 11

Pay As You Drive Growth Driven by Profitability, Competition, Regulation

By Insurance-Canada.ca BlogEditorNo Comments

It seems that Pay-As-You-Drive (PAYD), or Usage Based Auto Insurance (UBI) is gaining traction and credibility.  Drivers for the growth include business and regulatory reasons.  In addition, a respected consulting firm has offered a professional service to supports its use through aggregated data and analysis.

We have written in previous posts that Progressive Insurance has taken a lead in implementing its version of PAYD .  Towers Watson has studied the penetration of PAYD in the US.  Towers Watson director Robin Harbage was recently quoted in Insurance & Technology  as saying that Progressive has more than 250,000 insureds enrolled in its ‘Snapshot’ Pay-As-You-Drive program.  Towers Watson research has also found that insurers representing 60% of the US personal auto insurance market share have implemented a version of a UBI program to insureds in at least one state. Further, insurers representing an additional 20% of the private personal auto premium are running or preparing to run internal UBI pilots.

Harbage says that insurers are finding increase underwriting accuracy is a major driver for this growth:  “Where verified mileage is not already in use as a rating factor, usage-based rating offers an immediate upgrade in price accuracy.” Harbage continues: “There are also major advances in risk segmentation from using more detailed vehicle data. An excellent example of this is traffic density and road type based on when and where the vehicle is actually driven.”

Beyond the US, there is increased use of Telematics driven, at least in part, by regulation.  Catherine Stagg-Macey, reports on the Celent Blog: “The European Commission has already mandated new cars manufactured in Europe have to have a black box device. This is part of a pan-European initiative called e-Call which links up emergency services across the region. So if you are holidaying in France, in a new car, and have an accident, your telematics device makes a call into the local emergency services. The idea being that quick responses to accidents will save lives.”

Further, as we noted back in March, the European Court of Justice has passed a ruling to restrict the use of age and gender in automobile underwriting.  According to Stagg-Macey, the convergence of the availability of the devices and the restrictions from the court “make telematics more viable if not the only way forward for motor insurers.”

We commented back in May, that implementation of PAYD may be a multi-year initiative, simply due to the time it will take underwriters and actuaries to adjust to using the new criteria.  Towers Watson is addressing the implementation issues to some extent with the introduction of a service, called DriveAbility℠, which includes the aggregation and analysis of data from multiple insurers.  The objective is to provide “analytical support for insurers that translates to an individual score for each vehicle to both inform auto policy rating and encourage safer driving habits.”  Towers Watson indicates that uptake for its services are growing;  it is currently advising 18 insurers on their UBI programs.

 

 

 

Jul 06

When Demographics are Not Enough: A View of On-line Evolution

By Insurance-Canada.ca BlogEditorNo Comments

Population characteristics – age, gender, income, etc. -  play large roles in marketing generally and insurance marketing specifically.  With the proliferation of data coming from sources including social media and on-line services, leading experts are agreeing that these factors – referred to as demographics – may not be enough for optimal results.  A set of tools – psychographics – is beginning to show its value in on-line consumer marketing generally, and could provide benefits for insurance marketers specifically.

First, what is lacking when using demographics as differentiators?  A colleague of ours recently pointed us to an article by , a Digital and Social Media Strategist at Janrain, which deals with this well. To cut to the chase, Beckland points out that demographics seeks to influence large groups into taking buying action.   The philosopy, according to Beckland, is: “When you lump 78 million people into one group called ‘Baby Boomers,’ it’s much easier to sell them stuff, especially when consumers accepted their generational classification.”

The challenge is that this is not working as well as it has in the past for a variety of reasons.  For example, the cohorts (age bands) are shrinking in size.  Also, within a cohort, fragmentation is becoming the norm. “With the recent rise of the social web, people self-select into groups so small, so fragmented, and so temporal, that no overarching top-down approach could be successful at driving marketing performance,” Beckland writes.

An alternative that leading marketers are turning to is psychographic profiling, and we are all seeing this every time we buy something from Amazon.  Beckland describes this as follows:  “Psychographics look at the mental model of the consumer in the context of a customer lifecycle. Amazon.com has long been a leader in this space, through innovations like ‘recommended products’ and ‘users like me also bought.’ Its algorithms have learned to predict its users, and what they are interested in. And now, there are a number of tools that any business can use to leverage psychographics.”

So how might this apply to insurance?  Some leading on-line marketers are doing this already.  Progressive, for instance, uses comparison shopping as a lure to get a specific set of prospects to their site, and then uses a quoting facility to funnel ‘qualified’ prospects to the Progressive quote, while guiding others to competitors.

We found a marketing site which offers to provide qualified insurance leads based on psychographic qualification mechanisms.  Social Traffic is dedicated to ‘helping companies drive more traffic to their sites using social media.’  While we can’t vouch for the quality of the results, we were impressed with the description of how the company would devise a programme to attract qualified insurance shoppers.

The key element is to deeply understand the qualities you want in a ‘perfect’ customer.  That requires both intuition and good analytics to interrogate databases of customers and results.  With the resulting information, and a presence in the appropriate social media, there are proven mechanisms to pave roads for that perfect customer to follow to you.  Powerful stuff.

 

Jul 04

Claims Innovation, Social Business, and Competitive Advantage

By Insurance-Canada.ca BlogEditorNo Comments

As economic stresses, including the soft market, continue for insurance practitioners, leading organizations are looking for innovation in customer service to provide competitive advantages.  Claims offers unique prospects, according to one leading expert.  We feel this is supported by other trends and should be carefully examined.

In a recent post in Insurance & Technology, Michael Costonis, managing director of Accenture’s global claims practice, notes that “according to Accenture research, insurance customers placed ‘speed of problem resolution’ (that is, fast claims service) as their top criterion for choosing an insurance provider, ahead of price transparency and the availability of products that suit their individual needs.”

Costonis lists four areas that deserve special attention:  Mobility, Collaboration, Analytics, and Modern Technology.  These align with developments in the area that’s becoming known as ‘Social Business’ (See our recent post Social Business and Insurance – A Natural Fit?).  In a recent whitepaper IBM’s software group lists the contribution of the same elements as Costonis to enhancing customer service: “a Social Business can provide an online experience through ‘real people’ showing personalized profile information via instant messaging, community blogging or Web conferences – turning customers into advocates. In addition, it can strive to deliver realtime information to online customers through multiple devices (mobile, smart-phone, tablet PCs, etc.) to help ensure effective communication anytime and anywhere. As part of all this, an effective Social Business can also implement a flexible model of customer self service capabilities, such as chat forums and communities, to increase responsiveness and decrease costs.”

When taken together, these elements, combined with sophisticated analytics to control fraud and support intelligent claims settlement,  provide a foundation for a modern claims organization to support a sustainable competitive advantage.  Costonis summarizes: “Claims processing offers insurers numerous opportunities to establish and protect competitive advantage. To achieve consistently high performance in claims, however, insurers need to look at these ‘crown jewels’ in a new light, thinking of them not so much as a cost but as a way to provide distinctive customer service in the one area that really matters to insurance customers: getting claims processed and paid.”

And that keeps customers coming back.

 

 

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