Crowdsourcing catching on in the insurance industry
Crowdsourcing is the practice of using a large group of distributed people to accomplish a task in lieu of hiring a specific person (like a contractor or employee) or group of people to accomplish the task. Often a company will run a contest for a project or a promotion for testimonials. They receive tons of submissions, reward the best and use it in product development, marketing or other area. It’s a growing trend. LG used crowdsourcing for the design of a new phone in 2009, Netflix used it to create an algorithm to improve the accuracy of predicting peoples’ movie preferences, and MasterCard took advantage of it to come up with an advertisement. Think it won’t catch on in insurance? Through the Claim Prediction Challenge, Allstate landed a forecasting model that helped the insurer determine the likelihood of a customer to suffer an injury in a vehicle crash. Source: http://www.insurancenetworking.com
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Large ad budgets don’t always mean large customer conversions. For the
past several years insurance companies have led the pack when it comes to advertising spending. The insurance industry spent $5.7 billion on advertising and allowances in 2011. State Farm, Progressive and Geico spent a combined $111 million on Google advertising alone in 2011. But despite those enormous budgets, only 25 percent of insurance customers say they shopped for a new insurance carrier in the past 12 months. That’s an eight percent drop from 2011. Of those who did shop for a new carrier, 43 percent switched providers, which was a 3 percent increase over last year. Source: J.D. Power and Associates 2012 U.S. Insurance Shopping Study. http://autos. jdpower.com/content/press-release
AGENTS DESIRE TO DIVERSIFY
Sixty percent of independent agents plan to add a new business line or have already done so, according to the 2012 Survey of Agent- Carrier Relationships conducted by Channel Harvest Research sponsored by Insurance Journal. Twenty-five percent have a desire to expand into a new niche. Despite the agency demand for new lines like cyber liability, many are finding their carriers do not offer a diverse range of products. The findings show a great opportunity for insurers to this as well as other agency challenges identified in the survey. Source: Survey: Agencies Seek Carrier Help to Expand Into New Niches; Insurance Journal; May 21, 2012