It's tough to find any category that has undergone more change in the past decade than personal insurance. Evolution is the operative word as carriers struggle to maintain and grow share. At one time the category was owned lock, stock and barrel by insurance agents - the trusted resource you turned to for quotes, claims and anything else that had to do with an insurance-based brand. Agents ruled the day. Insurance carriers worried about making sure that they were in close conversation with their selling partners. It was all about managing their brand in channel so that the channel didn't manage the brand. The insurance agents made big money and made sure that insurance carriers were beholden to them. The ultimate position of strength. That's surely not the case today.
Over the last decade there has been a paradigm shift in personal lines insurance selling and promotion. The likes of Geico, Nationwide and Progressive have changed the game and the way in which it's played. Direct-to-consumer is what it's all about today. Why is it successful? Because direct-to-consumer means lower costs by eliminating the commissions the insurance agents enjoyed year after year. Today, Geico spends over $500 million reaching out to consumers. Direct-to-consumer is here to stay in this category. It's a whole new game.
This new battle is being played out in the digital world. New players are dominating the conversation. They've found new ways to reach out to customers, young and old, and get them to change the way they think about having to deal with insurance carriers. This is especially critical with older audiences who grew up with the bias that you bought your insurance through an insurance agent. That's a paradigm that no longer applies. The game has changed as we know it, especially for those of us who are over 50 years old.
The challenge is that as the Geico's, Progressive's and Nationwide's grow and evolve as brands, it is imperative that they find innovative ways to differentiate themselves. You can't compete on price alone. It's proven that if you compete on a price model, your margin will slowly erode year after year. They will have to find ways to maintain brand preference and, more importantly, get people to switch to their brand.
All of this leads to why I like Nationwide's newest product discriminator so much. Last month they introduced a new Nationwide iPhone application. It's a great product (and it's free, which makes it even better) that helps people who have been in an accident contact local authorities or emergency services, start the claims process and/or use the phone to take down information. It's essentially a checklist that helps you to think clearly at a time when you're distraught emotionally and, heaven forbid, hurt physically. The beauty is that Nationwide's new tool goes beyond being just a tool, and it does it whether or not you're a Nationwide customer - it's truly open. It's a brand differentiator and a category game changer in one. I'm sure that the Geico's and the Progressive's are going to offer an equivalent product, but Nationwide is in first. In the laws of the marketing jungle, he who is first in usually dominates. It's just another fascinating look at how a category continues to change on a day-in, day-out basis. It's because Nationwide knows that life comes at you fast and an accident can happen anytime. It's a product that's true to the tagline, which makes it even better. A game changer in the truest sense.
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