Tag Archives: Ameriprise

How the C-Suite Sees the Future

At the 2016 PCI Annual Meeting, a panel of retiring insurance executives discussed lessons learned over their careers. The panel comprised:

  • Marguerite Tortorello – moderator
  • Terrance Cavanaugh – president and CEO – Erie Insurance Group
  • Kenneth Ciak – vice chairman – Ameriprise Auto & Home Insurance
  • Tad Montross – retired CEO – Gen Re
  • J. Douglas Robinson – chairman – Utica National Insurance Group

What keeps you up at night, then and now?

  • The Weather Channel!
  • Making sure that we are achieving responsible growth for our shareholders.
  • The emerging risk trend that had not yet been identified.
  • Worrying is one step. As CEO, you need to do something about the things that cause you worry.
  • The dramatic change our economy is undergoing and the impact it will have on our industry.
  • As CEO, everything keeps you awake.

See also: Blending the New With the Old

Where do you think the culture of the insurance industry should be moving?

  • Our industry used to be very sleepy and stagnant. Over time, we are seeing more specialization, which allows for better expertise. We need to continue to attract better and smarter new talent into our industry. Our industry needs to do a better job explaining the role insurance has in the economy and all the good things we do.
  • The question is – how much of the change we are seeing right now is cyclical versus permanent? How companies respond to this is important to their future direction. Companies are more intelligent now because of underwriting and claims models. We need to be cautious about becoming overly dependent on these models.
  • Is your business culture an accelerator or an inhibitor to future business. Going forward, we need to focus more on service instead of just the protection that we offer. Our clients expect us to be more proactive.
  • There is more emphasis on “work-life” balance, but this may have gone too far. New employees want to work less but be rewarded more. Our clients expect 24-7 service, which conflicts with our employees’ desire for less time at work.

What types of traits do executives need to look for in their management team to lead into the future?

  • You want people who are curious and will challenge the status quo. We cannot be overly dependent on what we have done in the past to make decisions about the future.
  • Leadership needs to have a clear vision about their long-term goals and not get distracted by short-term issues.
  • Leaders need to show their employees they care about them and that we relate to them. Our customers want the same thing.

How do you see the industry better marketing itself to millennials to attract new talent?

  • We need to emphasize the vast variety of tasks we perform and jobs available in our industry.
  • Stressing the “service” aspect of our industry versus just paying claims. We help people at a time of need.
  • We are an industry that is under attack at the state and federal levels. We need to do a much better job talking about the good things we do for society and the key role our industry plays in preserving the economy.
  • Everyone uses insurance products, but few actually understand the insurance products. The industry needs to do a better job explaining what we do and why it is so important. We need people to view insurance as an investment in protection instead of just an expense.

How will technology affect our industry in the future?

  • Consumers want instantaneous service, and we need to be able to deliver it.
  • We still deliver paper policies, so we have a long way to go in the technology area.
  • It is important to balance technology changes with regulatory requirements.
  • Technology is affecting almost every risk we underwrite. Industry leadership needs to pay attention to these changes so they make sure they are evaluating the risk correctly.
  • We probably have made more mistakes with technology innovation than other industries due to the significant amount of historical data we are dependent on. On the flip side, we may become better at evaluating risk than public policy wants us to be as certain segments may become uninsurable with better data and analysis.

What are your concerns around the regulatory environment?

  • This is a huge issue. Not only are regulators wanting to regulate how we do the business of insurance, but they are also wanting to regulate what we invest in, who we promote, how we compensate people and the makeup of our boards. At some point, we have to run a business.
  • The constant change of regulations creates so many challenges. For example, after Hurricane Sandy states, put out new regulations to govern how companies handled claims on in-force policies.

See also: Are You Ready for the New Paradigm?  

What regulatory impact do you think the pending elections will have?

  • Historically, the party in the White House has not had a significant impact on the financial markets.
  • We are already seeing so much regulation on our industry, it is hard to get much worse.
  • There is concern that politicians will not like the answers that our data gives us with regard to rates and coverage limitations.
  • The sharing economy is going to have a big impact on our industry. The state elections and how they are viewing this could have a significant impact.
  • The concern is that one party may control the presidency, House and Senate, which would not be best for consumers or our industry as it would allow that party to unilaterally advance their agenda.

How do you see the distribution model changing?

  • We have seen significant consolidation on the brokerage side, and this will continue.
  • We are likely to see more direct-to-consumer products, which is what consumers are requesting.
  • There needs to be a way to allow consumers to have flexibility and still involve the agent or broker in the transaction.

What is one thing you wish you knew then that you know now?

  • I wish we had made bigger investments in technology earlier rather than constantly trying to modify legacy systems.
  • Be mindful of your body language and demeanor as people pay close attention to this when listening to your message.
  • It is so important to have the right people in the right place. Intellectual capital still drives everything.
  • Don’t be afraid to make decisions. Too many let indecision inhibit them.
  • My greatest fear was that I would hire the wrong people for the job. We eventually developed better tools to assist in that, and I wish they had been available earlier.

4 Ways Superstores Can Teach Insurers

A smoke alarm isn’t the only kind of protection on sale at your local superstore these days. Need some life or health insurance with those printer cartridges? You’re in luck. Insurers like Metlife and Aetna now sell insurance policies through superstores. Walmart launched a pilot program with Metlife to sell life insurance policies at 200 Walmart stores, and Costco members can select Aetna health plans offered through Costco’s Personal Health Insurance program — Costco has offered its members discounts on auto, homeowner, renters, umbrella and specialty insurance through Ameriprise Insurance for several years.

Although not every effort has gotten off to a flying start, these are good examples of insurers experimenting with approaches to tap into large, underserved markets and new sales channels and to create brand awareness in a shopping environment where there’s a natural connection with the products they sell.

What I’m most curious about is the impact the superstore channel will have on how these insurers sell. What can insurers learn from two of the world’s most valuable retail brands about creating the kind of convenient, affordable one-stop-shopping experiences that Walmart and Costco offer and consumers so desperately want?

Plenty of things. Here are four:

1) FOCUS ON SELLING YOUR BRAND RATHER THAN YOUR PRODUCT

Walmart and Costco both offer lower-priced house brand products, but neither focuses its attention on selling its own product even though that would obviously benefit the bottom-line. The goal is to own the customer by meeting the brand promise of offering low prices and good value on any and all products that a customer wants to buy. Walmart doesn’t worry about selling a competitor’s product – even with a small profit margin, Walmart still generates revenue and profit, through multiple product sales, and keeps the customer coming back rather than sending him to shop with the competition. It’s good business sense to focus on what the customer wants to buy rather than what a retailer wants to sell.

Similarly, it’s good business sense for an insurer to consider selling products that are a good fit with the brand and that complement other product offerings – even if that means offering a competitor’s product.

Selling a competitor’s products can help insurers facilitate that convenient, one-stop-shopping experience that consumers want. It allows the insurer to keep the customer relationship while generating revenue from underwriting the risk, or from brokerage fees. And in cases where an insurer doesn’t have the experience, appetite or capacity to underwrite the product, it’s better to make fee income than the underwriting income.

An insurer’s No. 1 goal is to own the customer. The insurer that underwrites the product makes one sale; the insurer that owns the customer can sell to her for her entire lifetime. That can mean decades of selling renewals, cross-selling related products and generating referral business.

2) OFFER CUSTOMERS CHOICE

Mac or PC? Chocolate or vanilla? We’re a culture of consumers who covet choice. Even a limited selection is enough to provide customers with this valuable component of the shopping experience. While Costco is cautious about the number of brands it offers (limiting the number of brands allows Costco to get the kind of volume discounts it needs to offer the lowest prices), like Walmart it offers at least two choices of brands for any given product.

Providing a competitor’s products can help insurers, too. The objective is to give customers a selection ample enough that they can compare insurance products and choose the product that works best for them. As with Costco, this may mean offering the customer a choice between two brands that offer different price points and levels of coverage.

3) SELL CUSTOMERS EVERYTHING THEY WANT

There’s nothing haphazard about the layout of a Walmart or Costco. Superstores invest a great deal of time and money walking the walk of their customers. They think through how customers search and shop for products and how those products should be grouped for optimal cross-selling opportunities.

While insurers understand the profitable art of cross-selling, in theory, I’ve witnessed more than a few property and casualty insurers who’ve missed big opportunities to cross-sell products. What happens when that flower shop you just insured needs auto insurance on its three delivery vehicles and you don’t have it? If the insurer isn’t prepared to sell the customer what she wants, the customer will go to the competition to satisfy her multiple coverage requirements.

4) NEVER LET THE CUSTOMER LEAVE EMPTY-HANDED

The path from creating awareness to having a customer walk through the door ready to purchase is long and expensive. A superstore does everything in its power to make sure you have no excuse to walk out the door without buying something.

Factoring in advertising and promotional campaigns, the cost of bringing a paying customer through the door could be as high as $400 to $500 for some insurers. Every insurer’s goal should be to make effective use of a lead by finding some way to fulfill the customer’s product needs.

I’ve only scratched the surface. Now it’s your turn: What superstore selling practices do you think insurers should consider to win market share?