Tag Archives: allstate

What Tim Howard Just Did for Insurance

Tim Howard saved 16 shots during Tuesday’s World Cup match, the most by any goalie in the 50 years for which records have been kept. While he didn’t stop Belgium from winning, he gave America a hero and helped take people’s minds off healthcare coverage and Hobby Lobby. In his rise to superstardom, he took insurance with him.

@TommyTranTV hits the nail on the head:

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The Twitterverse focused on Geico, probably because we all would be in a better place if more people could recite the multiplication table than “15 minutes could…

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The 7.5 minute countermarketing commercial by Allstate’s Esurance unit is not the answer, but opportunity might be knocking on Allstate’s door, even if just redoes its 2011 take with Howard. (Allstate: Use his real voice this time; we all know what it sounds like by now.)

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Best of all, without naming names, insurance has entered the game:

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Can Amazon Dominate in Insurance, Too?

In January 2013, LIMRA reported that 90% of industry executives it had surveyed believe that insurance companies will continue to form strategic alliances with “non-traditional organizations” to expand distribution. The example cited was MetLife’s trial alliance with 200 Wal-Mart stores. Then Accenture’s “Customer-Driven Innovation Survey” found that more than two-thirds of customers would consider purchasing home, auto and life insurance from businesses other than insurers—23% were open to purchasing from online service providers like Amazon or Google (which acquired auto insurance aggregator BeatThatQuote.com way back in 2011 in the UK).Amazon has proven leadership as an e-commerce distributor, while Google is seen primarily as an information organization, so I would like to elaborate exclusively on the compelling reasons for insurers and Amazon to create a distribution model to match ever-evolving customer demands.

Customer demands

Every information source and every analyst report on insurance in the recent past points to changes in customer’s preferences. Generation X, Generation Y and Millennials prefer doing business with companies that provide:

  • Convenience of on-demand buying and self-service, predominantly through digital channels such as web and mobile.
  • Personalization of product and service delivery, including helping the customer choose the right product.
  • Building trust through transparency in pricing, simplified products and clear articulation of benefits.

So, insurers must innovate in personalizing products, providing transparency in the value of products and services and demonstrating excellence in on-demand distribution. Innovation must also touch “moments of truth” such as claims and policy changes. It is also critical that the distribution lifecycle should be an iterative process to consistently review the value of benefits and help customers fine tune the products and services they purchase.

Insurers are lagging

Insurers have been consistently lagging in product innovation and trying to catch up through distribution. In P&C, all the personal product lines are commoditized. In life insurance, term-based products are commoditized. It is true some product personalization has been in the market for some time, such as pay-as-you-driving with telematics in auto insurance (led by Progressive, which saw a boost in profitability). Yet personalization has not reached its potential because of multiple inhibiting factors both internal (lack of aggregated information on risk, etc.) and external (privacy concern, etc.). The lack of product innovation shifts the responsibility of differentiation to distribution.

Manufacturing and retail have been pioneers in showing how boring commodity products can be differentiated through aspects of distribution such as packaging and channel selection.  A recent example is Coca Cola, which has been managing differentiation based on targeted customer segment and channel (Wal-Mart vs. Walgreens vs. Costco, etc.) and has moved one step closer to the customer by signing a 10-year agreement with Green Mountain Coffee Roasters to bring vending machines into kitchens.

In the past, insurance has learned from retail about channels. GEICO, which was known for selling online, has set up brick-and-mortar agency centers by responding to the fact that customers want to shop online but buy from agents. Allstate, where agents lead distribution, not only built online sales support but went one step further, acquiring Esurance to become a multi-channel insurer.

Now, with retail defining and moving toward omni-channel selling, through what is known as “device-independent e-commerce,” it is time for insurers to piggyback on Amazon, which is on the leading-edge of the emerging distribution model.

Amazon ready to sell insurance

Currently, Amazon merely sells books on insurance, has a limited selection of extended warranties for electronics and provides sponsored links for insurers. But to start selling insurance much more seriously would be easy for Amazon. It could expand its extended warranties and offer valuable personal property (VPP) insurance, as it sells the products that are insurable under VPP. It would also be logical for Amazon to extend and be an aggregator for auto, renters, homeowners and life insurance.

The critical question is: “Will customers want to buy from Amazon when there are other aggregators available?” For customers, having reusable information reduces effort, so VPP insurance would be a natural for Amazon. It gets more complex (and interesting) when analyzing the success factors involved in selling complex products such as auto, renters, homeowners and life insurance.

Few insurers can share data and process across products. Still fewer can share across channels. Aggregators are set up as silos. But Amazon’s shopping cart can provide ease of buying, plus reusability of data across channels (web and mobile) and products. The shopping cart actually can resolve the commodity dilemma of insurers through bundling. It can take the customers’ experience to the next level.

Amazon’s analytics-driven capabilities, such as detailed product features and comparisons (price to value of benefits), product reviews, questions and answers, “customers who bought this also bought,” “customers who viewed this also viewed” and offers for the week can be customized for insurance to offer suitable product advice to customers. Insurers do not have such an integrated view because of internal challenges in the effective use of data.

Amazon’s comparisons on features and pricing could improve transparency for customers. The reviews, Q&A and “similar customers” features would provide advice. “Weekly offers” would help customers continually review and tweak their insurance coverage. Hence, Amazon could become the channel of choice for all consumer insurance needs.

Sacred relationship, and not the competition, is the way to go

While Amazon could become consumers’ “trusted advisor,” Amazon also provides a jump start to insurance companies that want to build on the ready availability of its technology infrastructure, reducing their investment and time to market. Amazon might cooperate with innovative insurers to be an aggregator because that would provide immediate and direct profits from its platform.

Amazon would also generate synergies among its various product lines—for instance, when someone starts buying baby products, Amazon might offer life insurance. For existing homeowners policyholders, it could offer products, such as power generators, to help them get prepared and avoid loss during natural disasters such as hurricanes and ice storms. The customer’s engagement with Amazon would increase, leading to greater share of wallet through cross-selling and up-selling opportunities.

So, an insurer that provides coverage through Amazon would be creating a win-win-win—for Amazon, for customers and, of course, for itself.

Video Alarms Go Mainstream

Video is now the most popular “option” on alarm systems, a fundamental change for the alarm business. Viewing cameras on a smartphone, known as “self-surveillance,” became a standard feature for all but the most basic burglar alarms.  Now, video is actually being delivered to the central station during an alarm event.  This is the next logical step in security, letting the central station operator verify the alarm and improve police response to deliver greater security.

Instead of just viewing a video of what actually caused the alarms, the central station operator can use the cameras to attempt to see why there was an alarm.  In 2004, when the industry standard was created, video verification was reserved for specialized applications.  Equipment was expensive and cumbersome to monitor.  Nearly a decade later, technology has changed, and video verification is moving mainstream.

IP cameras and specialized camera/sensor devices are now well under $100 and easy to install.  The last piece of the puzzle to fall into place was driving down central station monitoring costs.  Over the past couple of years, central stations have developed affordable video verification processes that fit the mainstream alarm business model.  These central station processes can be applied to a broad range of hardware, from IP cameras equipped with analytics to specialized sensor/cameras designed specifically for video verification.  Third party central stations are offering dealers video verification for as little as $5 over what they charge to monitor a traditional alarm.

Benefits

Contrary to common perception, video verification’s value is not primarily to reduce false alarms. From the property owner’s perspective, false-alarm reduction is more a side effect that “reduces a negative” rather than creating value with additional security.  Consumers looking to purchase “security” want the best security they can afford, and they typically equate this with fast police response.  Video verification delivers faster police response.  Because of historical issues, traditional alarms typically receive a “Priority 3” response from law enforcement.  In contrast, video verified alarms typically receive a “Priority 1” response and are treated as “in progress” calls by responding officers.  The difference in response times between a 1 and 3 is significant.   In Fairfax County, the affluent area around Washington, DC, a video-verified alarm receives response more than 12 minutes faster than a traditional alarm.  From a property owner’s perspective, a lot can happen in 12 minutes in a commercial burglary or home invasion.

Jurisdiction Video Verified Traditional Alarm Response Differential
Boston, MA 7:38 21:00 13:22
Charlotte, NC 5:10 13:30 8:20
Chula Vista, CA 5:05 19:18 14:13
Watertown, MA 4:00 23:00 19:00
Fairfax County, VA 6:00 18:02 12:02
Salinas, CA 2:54 39:25 36:29
Amarillo, TX 10:06 19:24 9:18
Barrie, ON 8:02 16:02 8:00

With reductions in municipal budgets affecting many jurisdictions across the US and Canada, law enforcement has downgraded response to non-verified alarms in an effort to save money.  Sometimes this means a “broadcast and file” policy, where the alarm is broadcast over the police radio and officers can respond if they have nothing more important to do.  Sometimes, police refuse to respond to non-verified alarms at all.  But these same financially stressed jurisdictions all continue to respond to video verified alarms.

The benefits of video verification extend beyond priority response.  A well-publicized court case recently sent shock waves through the alarm business when an industry icon was forced to pay a multimillion-dollar judgment to a woman who was assaulted after she entered her home.  The alarm system had worked.  The motion detector triggered at 10:00 AM, and the central station, after failing to reach the owner, dispatched the police. They found nothing amiss.   Throughout the day, the motion sensor sent in four additional alarms, but the central station was unable to reach the owner on these, as well.  After this rash of alarms, police told the central station that they would stop responding unless the keyholder met them at the home.  That evening, when the owner returned home after work, she was assaulted by an intruder who had been inside her home throughout the day.  This horrific incident simply would not have happened if the central station had been able to see the intruder who triggered the alarms.  Video verification means greater security because the central station operator becomes a remote eyewitness to the alarm event.

Monitoring

VideoWhen the industry standard for video verification was created in 2004, self-surveillance on smartphones was not even on the radar. Apple’s first iPhone did not even hit the market until 2007.  The early video verification process required the central station operator to manually access a camera/DVR when an alarm triggered and download the video for review.  This often required working with static IP addresses, firewalls and video management systems that were isolated from the central station automation software that ran the business.   All of this required specialized operators who were trained to manage video and operate multiple video systems remotely.  Technology changed all this.  Video verification is now done by the typical operator in the central station.  Central station automation like MAStermind, Bold, Dice, MicroKey, SIMS, and others have integrated video verification into their standard alarm processes.  In addition, there are third party solutions like I-View Now that enable any central station to do video verification without changing their automation software.  These central station solutions work with a wide variety of hardware, from IP cameras to specialized camera/sensors devices designed specifically for video verification.  Just as smartphones and mobile apps changed the lives of consumers, the central station solutions for video verification have made monitoring video alarms simple and inexpensive for the typical alarm dealer.

Market Penetration

Self-surveillance and home automation have created a paradigm shift in the alarm business affecting even the most basic alarm offering.  Declining video hardware and monitoring costs mean that video verification now fits the competitive business model of $99 down and a multi-year contract that finances the hardware/installation.  Commercial applications have been the first to embrace video verification.  The newest generations of hardware and monitoring services have finally reached the pricing level necessary to move into the competitive residential market.

Partners

Grand Prairie PoliceThe alarm business is built upon a partnership with insurance industry and law enforcement.  The insurers encourage their policy holders to install alarm systems to reduce claims and prevent loss.  The alarm industry depends upon law enforcement to respond to their alarms and protect their customers in the event of a burglary or intrusion.  Video verification is already strengthening this partnership. The insurance industry has taken notice of priority response and what it means to them in terms of reduced losses.  In January 2013, Pharmacists Mutual Insurance published the results of a five-year study that linked arrest rates and losses experienced to police response times.  Other major insurance companies like Hanover, CNA, Allstate, and State Farm are working on updating policies to encourage their policy holders to move to video verification.  While this is a slow process, the insurance industry has begun to turn the rudder, and the ship is in motion.

In the past decade, video technology has fundamentally changed law enforcement with cameras in patrol cars and on highways and even portable cameras worn by officers.  Law enforcement depends upon video, and video verified alarms are another step in this direction.  While law enforcement understands video verification means fewer false alarms, they also know that video verified alarms mean more arrests.   Officers have always been motivated to “catch the bad guys,” and video verification helps make this happen.

As Chief Steve Dye of Grand Prairie, TX, explained to the IACP committee on Community Policing in a recent presentation, “From our perspective, we see no difference between an eyewitness calling to report a crime and a central station operator calling to report a crime they have seen on video.  In fact, the fact that a video exists of the actual event could mean the central station call could even be considered stronger.”  Chief Dye is promoting priority response to encourage his citizens to install video verified alarms to help him in the battle against property crime.  It is making a difference. Currently, the response time for a video verified alarm in Grand Prairie, TX is less than two minutes.

Insurers Win Big With Social Media

Insurance agents have long understood the need to be social as a part of their sales process: the best agents have always been those who build strong relationships with and educate customers, keep in touch and ask for referrals. But new ways of communicating have resulted in new expectations buyers have, such as being able to Google an agent and check out his or her LinkedIn profile before deciding to proceed. This means that insurers need to rethink the sales process and the tools that they provide to their agents, so agents can take full advantage of the power of social media.

The profile information and status updates that more than one billion people share each day on Facebook, Twitter and LinkedIn offer agents incredible insights into what is happening in the lives of current and potential policyholders. These insights signal to agents what types of insurance are needed by the customer and generally allow the agent to build trust through personal connection and personalized service. As a result, agents can now be smarter about when they contact customers and prospects and more directed in their communications, saving agents time and improving business results. Researching prospects on social media and understanding what's happening in their lives ensures that every call will be warm. In the era of social media, the cold call is dead.

The insurance industry has been an early adopter of social technology. While regulated industries, including financial services and insurance, tend to be cautious because of compliance concerns, a study by International Data Corp. found that the insurance industry has actually blazed the trail with social media. Farmers, Nationwide, Thrivent Financial, Northwestern Mutual and other Fortune 500 insurance organizations have instituted forward-thinking initiatives on Facebook, LinkedIn and Twitter that have demonstrated social success that other industries are attempting to replicate.

But it's time for all insurers to move to the second wave with social. In the first wave, many companies rushed to get as many “likes” as possible on their Facebook pages. But research shows that these “likes” have failed to convert into lasting value and tangible return on investment. In the second wave of social, insurers are realizing that they need to focus on results achieved through true engagement and authentic relationships. Just as it has always been, since long before the digital age, developing long-standing relationships is key to building a successful business in the social era.

For insurers, moving on to the second wave means two main things:

First, insurers need to provide unique and relevant content that agents can use on their Facebook, Twitter and LinkedIn feeds. For an agent, sharing relevant content via social channels builds credibility and helps establish them as a trusted expert that their connections will turn to when they need insurance. Marketing departments already know the type of content that resonates with customers and are typically producing professional content used in other online and offline channels. For example, success stories about the value of insurance or financial planning tools are valuable pieces of content for agents to share socially.

Second, insurers must empower the field. As an example, Thrivent Financial, a Hearsay Social client, has hundreds of agents actively managing their own local Facebook pages. As financial experts, Thrivent Financial representatives share value with their close-knit communities by consistently posting relevant content, like IRA calculators and market analyses. In addition, Thrivent reps share personal updates and plan community events, building an authentic social presence while still appropriately representing brand.

Organizations that empower agents to create their own local social-media presences are many times more effective than when the same messages are shared from a corporate page. While having five million fans wins bragging rights for any brand marketer, from the consumer's perspective, it can be much more powerful to hear the story from a local representative that you know and trust.

A local insurance agent's Facebook page

Savvy chief marketing officers at insurers have done a great job of making a relatively abstract product tangible by creating some of the most interesting and memorable personas in the history of marketing — Mayhem the Allstate villain, Flo the Progressive Girl, Snoopy representing MetLife and the GEICO gecko. For an industry that sells a product you can't hear, see, smell, taste or touch, this is impressive. And the characters can drive social-media strategies, allowing a company to create a social-media asset for a character (e.g., the Facebook page for Mayhem). Getting consumers to “like” the page can provide yet another entry point into the News Feed, increasing engagement for the brand and driving sales. When your local MetLife agent posts a picture of a sleeping Snoopy with the text “TGIF,” how can you not click “like”?

While insurers are off to a great start with social marketing, there is so much more that they can do to leverage the power of social media into sales. By coordinating enterprise-wide social selling programs, insurance companies can empower agents to attract more prospects and build stronger relationships, leading the way by selling socially.

Mini Meds For Maxi Greed

Within a certain part of Italy that mints its own coins and has a standing army outfitted in designer togs from Michelangelo, when one makes a mistake, the correct and only exclamation is Mea Culpa. Well actually it’s more like Mea Culpa, Mea Culpa, Mea Maxima Culpa — but even Italians are known to abbreviate their Latin for the sake of expediency. That’s my mantra this week after last week’s post on Medical Gluttony. In that article we highlighted a new book by Dr. Otis Webb Brawley — How We Do Harm: A Doctor Breaks Ranks About Being Sick in America
— in which he characterized portions of our healthcare delivery system as gluttonous. In all fairness, doctors and providers are most definitely not alone in their greed. I never said they were — but I tend to err on the Italian side of life when it comes to my public Mea Culpa’s.

This week it’s time to turn our attention to another form of healthcare malfeasance — a form of Payer Gluttony. By the time we’re done with our mini series on gluttony, we’ll likely get to include Pharma Gluttony, Political Gluttony and possibly some other gluttonies as yet to be uncovered. It’s no wonder our system is $3 trillion per year and represents 18% of GDP. In their landmark study from 2008 — The Price of Excess — PWC estimated that roughly half of our healthcare spending is completely wasted. The real question remains — is it truly wasted — or is this just the biggest trough America has ever built?

Like most of healthcare’s really sad tales, this one isn’t new — and it’s certainly not the most egregious payer offense — but it is among the most blatant. Simply put, it’s a form of healthcare insurance that really isn’t. Earlier this year, Consumer Reports revisited the issue of an entire range of products with names like Mini-Meds, Discount Health Cards and Fixed Benefit Indemnity plans. In theory, the idea has always been to provide some healthcare coverage, however limited, to those who couldn’t afford either a high-deductible health plan — or catastrophic only coverage. In reality, the practice includes some of the biggest names in the Health Insurance business — including Cigna, Aetna and Allstate. There is also an entire roster of late night TV ads pushing products like “A Real Healthcare Plan Starting As Little As 25 Cents a Day” from a company called HealthcareOne. It was estimated that HealthcareOne was taking in about $500,000 to $600,000 per month — before regulators finally shut it down.

Sample — Fixed Benefit Indemnity Plan
In most cases, especially the discount health cards, the benefits were either a small fraction of anything that could be considered useful — or simply non-existent. One lady signed up in order to get a “free flu shot.” Eighteen months later — after $1,717 in payments, the only activity on her account was a single denied claim — for the flu shot. In fact, fixed benefit indemnity plans aren’t even considered an insurance product — so they are not subject to the healthcare reform legislation. Most of these products are being peddled to temp or service sector workers — and it’s often highlighted as an employee “benefit” by large retailers and food service employers at some of the nations largest chains &mdash including McDonalds. The current estimate is that about 3.9 million people are enrolled under these various plans. Consumer Reports went as far as to call the entire group of products “junk” and recommends avoiding them altogether. Their first suggestion on how to avoid them? “Don’t shop from a search engine.”

From the Consumer Reports article — here is a list of the four companies with the largest number of enrolled members — and their response as to why they provide these plans:

Largest Mini-Med Sellers

  • Cigna Starbridge 265,000 enrollees. “Policies are offered to … workers who typically are not eligible for any other employer sponsored-group health coverage.”
  • Aetna SRC 209,423 enrollees. “It’s still some coverage for people who may not have any other options.”
  • BCS Insurance 115,000 enrollees, including McDonald’s hourly employees. “It’s a matter of affordability. These are largely part-time and hourly workers.”
  • American Heritage Life Insurance Company (Allstate) 69,945 enrollees. “Employers … wanted to provide a more affordable voluntary benefit option to their … lower-wage employees.”

The Patient Protection and Affordable Care Act of 2010 — the “sweeping” healthcare reform legislation that was enacted in 2010 specifically banned these products outright, but of course at this trough the word “ban” is unacceptable so waivers were quickly requested and just as quickly granted (effective until 2014). As of last month, there were 1,231 waivers issued, and there are 50 companies alone that offer mini-med products.

Unfortunately, healthcare news doesn’t always have to be breaking to warrant coverage. In this case — it certainly doesn’t qualify as breaking — but it absolutely warrants the added coverage.