Regulatory changes in industries cause companies to engage with consumers and compete in ways they never before considered. A great example is the FCRA (Fair Credit Reporting Act) Privacy regulation in the 1980’s that created a new way for credit card companies to target, reach, and measure direct to consumer acquisition efforts through direct mail. In similar fashion, the changes introduced by the Patient Protection and Affordable Care Act will have a profound and permanent impact to the marketing, analytical, and IT areas of Health Care Payers. While Health Care Payers have a lot of work to do from a strategy and organizational perspective, there is a transitional precedent in another sector of the insurance industry where lessons learned can be leveraged as they prepare for life after PPACA is implemented.
In the Property & Casualty (P&C) market we have seen an evolution over the past 2 decades in the way that consumers purchase auto insurance. Companies like GEICO and Progressive led the way in direct-to-consumer marketing of auto policies along with the utilization of web, direct mail, and call centers as distribution channels. These companies invested in the people and capabilities to identify, recognize, and target consumers delivering a personalized customer experience that ushered in tremendous growth while stealing market share from traditional agent based insurers. Historically, P&C carriers engaged consumers through a vast agent based network with local offices. The primary focus of the marketing department at these carriers was the agent and ensuring that marketing collateral accurately represented the brand message or product feature conveyed to the marketplace. Fast forward to current day, and it would be difficult to find a P&C carrier who hasn’t made the staffing, infrastructure, and strategy changes to their marketing organizations to be more focused on the consumer while keeping a good working relationship with the agent based field staff. These changes also extend to the analytical and IT departments who provide support functions for marketing enablement. About a decade ago, we saw the first signs of this professional migration when talented marketers, technologists, and strategists left the financial services sector to move to the P&C carrier space. These professionals brought with them the experience of how to organize, design, and implement direct to consumer capabilities that drive customer engagement and experience .Those carriers that were first to adopt created a competitive advantage over their competitors and those gains still exist today. Meanwhile, GEICO and Progressive continue to grow at a very healthy rate.
Today, we find ourselves at a similar inflection point in the healthcare insurance industry. Healthcare Insurance Payers. They have also typically focused on the agent/broker relationship to deliver members from employer based healthcare plans and have built direct to senior acquisition systems and implemented marketing processes focused on increasing member enrollment in the regulated Medicare marketplace. The resources, techniques and strategies for this traditional model will have to be overhauled and new capabilities built to allow these carriers to compete in the new choice driven Medicare market and the Individual exchange marketplace. Member retention programs in the Medicare space will be critical to survival and the ability to acquire healthy consumers who engage digitally in the new individual exchange marketplace will be equally important.
GEICO’s direct to consumer model changed the way all P&C carriers approached their business. In similar fashion, those healthcare payers that build their marketing strategy, organization, and supporting technologies around the customer experience will gain a distinct advantage over their competitors. The technology, data and knowledge capital exists to optimize how and when you interact with your members and ultimately improve their experience with your brand. As marketing leaders, it is imperative that we embrace this changing regulatory environment and take advantage of the opportunities that lie ahead.