< PreviousSPECIAL ADVERTISING SECTIONSPECIAL ADVERTISING SECTION Issues & Answers Share this edition at www.bestreview.com/issuesanswersarchive.asp. BEST’S REVIEW • OCTOBER 2022 19 like renewal retention. If you’re renewing the vast majority of your policies, that’s an indication that your customers are having a good customer experience. There’s also new business submission flow. If brokers like what they see and like the experience of doing business with you, then they’re going to be inclined to send you more new business opportunities. How does PHLY manage the customer experience? It’s about providing unsurpassed customer service, best-in-class claims management, along with custom-tailored risk management services, depending on the industry that we’re dealing with. Then a concept we call TEAMPHLY, which is our Marketing, Underwriting, Account Management, Risk Management, and Claims teams all working together to provide answers to our customers and to our agency producers when they need it as quickly as possible. We’ve been talking to our policyholders and our producers frequently— getting feedback from them about what’s important, what isn’t important. Then we’ve been focusing on trying to address the things that are going to move the needle with them the most. Bob Pottle, Chief Strategic Operations Officer with Philadelphia Insurance Companies, says that TEAMPHLY allows the company’s people to spend their time interacting with policyholders and agents. “Doing this makes our team more productive as we build relationships and make those relationships a lot stronger,” he said. Following are excerpts from an interview. What is customer experience in the insurance industry? That is the magic question. The reality is that most carriers’ products are all very similar. Figuring out ways to differentiate yourself from your competition is the challenge. It comes down to the customer experience, and that being a critical way for you to stand out among the competition. The things that come to mind when I think about it would be easy things like responsiveness. Being somebody who returns a phone call quickly, answers an email promptly, things like that. Having flexibility from an underwriting standpoint. Being willing to look at creative ways to try and capitalize on opportunities to write business. Product knowledge is also critical to the customer experience. Being able to answer questions regarding the coverages and so forth would be important. Something that we’ve always tried to strive for here is to underpromise and overdeliver—setting expectations accordingly and then following through effectively. How did the pandemic change how carriers interact with agents and policyholders? The pandemic put a real focus on ease of doing business. Being able to provide answers, provide service—whether it’s to agents or policyholders—from anywhere, at any time. People working from home, on mobile devices, on tablets, working nontraditional hours. Being able to conduct some business at 8 o’clock at night if you’re sitting at home. It put a focus on creating self service options. Being able to give people a way to get things done without having to have to talk to somebody during normal business hours. Are there ways to measure the effectiveness of the customer experience? There are many ways to do that. One of the more common ones is Net Promoter Score, which we watch very closely at PHLY. You take your percentage of promoters and subtract your percentage of detractors, and you come up with a score. There are things How TEAMPHLY Wins With Customers Bob Pottle Chief Strategic Operations Officer Philadelphia Insurance Companies “With PHLY’s Agency Technology Council, we meet quarterly with a cross section of our agency force to get real time direct feedback from them on customer experience.” Visit the Issues & Answers section at www.bestreview.com to watch an interview with Bob Pottle.SPECIAL ADVERTISING SECTIONSPECIAL ADVERTISING SECTION Issues & Answers Share this edition at www.bestreview.com/issuesanswersarchive.asp. BEST’S REVIEW • OCTOBER 2022 21 Several carriers are using anthropology methods to understand how the minds of consumers and decision makers work. Is claims also an important part of the customer experience? It is. Claims is going through a transformation and is in need of new technologies to drive loss ratios downward. Touchless claims is one transformational journey that a lot of carriers have started. Capgemini has undertaken significant research on this matter. Looking at loss ratios, we have identified large blocks of expenses and loss drivers. We have observed a number of carriers, both big and small, investing in technology to shave unit costs, improve efficiencies in claims handling, and also to improve overall employee experience. For instance, aerial imagery is used very well today to control potential damages and settle claims quicker. Similarly, we see significant use of IOT and device data to prevent losses. We want to start looking at how we can use insights from claims in redesigning coverages and products. There’s a heightened need for improving the claims experience and drawing more insights from it. Going touchless in most of the claims processes will help insurers attain these benefits. Ajish Gopan, Vice President and Global Head, Insurance Insights and Data for Capgemini, recently discussed the roles that partner, employee, and customer experience play in driving growth. “We need to ensure that exceptional experience is maintained throughout the entire ecosystem,” he said. Following are excerpts from an interview. For insurers to be successful, is it all about the experience they provide their many partners? It’s certainly about the experience, but it is more than that. We researched this topic in depth as part of our World Insurance Report. We found that it’s a combination of various elements that provide a superior experience across personal lines as well as commercial lines. First, it’s about convenience and enhancing access to digital channels for consumers, brokers, and prospects alike. Second, the role of new digital intermediaries, like price comparison sites and the new crop of underwriting companies, extend the reach of many insurers to new customers. Third, it’s about the quality and reach of advice consumers and prospects can receive from insurers. This is critical for growth as it significantly influences purchase decisions across channels. What is the importance of the employee experience? Our industry continues to be high touch and employees are critical in delivering a superior experience to customers and brokers. Therefore, the employee experience is a foundational component requiring innovation. For instance, to create the right employee experience, it’s necessary to listen to and understand employee needs, very much like an insurer needs to listen to, know, and understand their customers or brokers. Insurers need to spend time and effort profiling employees, including their quality and content of work, to design the right climate for them to engage. We see that many carriers are implementing HR analytics solutions and integrating insights-driven innovation into people processes to provide the best experience possible for their employees. What is the importance of the customer experience? It’s critical. All of our clients use Net Promoter Score (NPS) as a primary experience metric. There are a lot of other avenues to get additional insights into how the mind of a decision maker, in a business or home, is evaluating their final decision. To provide a better customer experience, it’s very important to lay the foundation to gather more real-time intelligence from external sources and derive better insights about what drives positive customer experience at every touch point—digital or otherwise. The Experience Matters Ajish Gopan Vice President and Global Head, Insurance Insights and Data Capgemini “We’re at a point in time where insurance companies and brokers need to step up their game of creating that extraordinary experience across all customer touch points.” Visit the Issues & Answers section at www.bestreview.com to watch the full interview with Ajish Gopan.22 BEST’S REVIEW • OCTOBER 2022 Life Insurance Whittling Down: In 2023, Cuna Mutual Prepares to Rebrand and Focus on Middle Market “We have to get this right,” Chief Executive Officer Robert Trunzo says as the carrier, with its origins in the credit union space, plans to bring a diverse set of brands under one roof. by Terrence Dopp L ife insurers spent years chasing the whales: high net worth individuals who could shoulder large policies and might just be in the market for a host of ancillary financial and protection products. But not Robert Trunzo, president and chief executive of Cuna Mutual Group. As he tells it, the company’s bread and butter lies in what he refers to as “hardworking Americans,” defined roughly as people earning between $40,000 and $120,000 annually. The company is in the midst of a rebranding that he says will bring products now sold under many banners into one entity renamed TruStage after an existing product line. That trademark of the Cuna Mutual portfolio currently offers digitally issued policies with a limited face value under its umbrella. And along the way those folks will be the linchpin of the strategy. Trunzo likes to point out that isn’t a new segment for the company, just a refinement in the way they reach it. “We have no desire to move up, up, up market,” he said. “We’re quite comfortable serving the hardworking Americans and we’ve had great success doing that.” Trunzo took over as the eighth president and chief executive officer of Cuna Mutual in 2014 after joining in 2005 and progressing through roles that included chief operating officer and executive vice president of sales and marketing. The phrase “hardworking Americans” comes Terrence Dopp is a senior associate editor. He can be reached at terry.dopp@ambest.com. Key Points Rebranding: In early 2023, Cuna Mutual Group will shift nearly a dozen brands into the TruStage portfolio in an effort to streamline and simplify. Market: TruStage will focus on the so-called middle market— middle- and working-class people in the market for protection products with modest face amounts—that Cuna Mutual has served under various monikers since 1935. Uncertainty: Like other insurers, the company is bracing for economic risk in late 2022 and early 2023, a pain the company said could be felt acutely by the people it’s serving.23 BEST’S REVIEW • OCTOBER 2022 up often as Trunzo discusses the efforts and those people the TruStage shift is intended to target. Part euphemism and part marketing, it’s the term the company prefers to signify the demographic it seeks to reach and looks to create a bond with. Timing The various underwriting entities of Cuna Mutual are in a strong place: AM Best assigns a Financial Strength Rating of A (Excellent) or A- (Excellent) to nearly all of their properties with the exception of the Union Security Insurance Co., which has a rating of B++ (Good). The rebranding is scheduled to begin in early 2023. Every enterprise, business-to-business and consumer brand under which any Cuna Mutual products are sold will be brought under the TruStage name. In addition to transitioning the consumer-facing products and brands, the company’s website, digital marketing materials and collateral all will be rebranded as well. Trunzo said the decision had been “three or four years” in the making and is a collaborative decision among the company’s board. While he’d previously pushed for tucking the entire company under the TruStage identity, timing was always the major issue. With TruStage seeing double-digit growth on an ongoing basis, the time came for the move, he said. “The rebranding really allows us to, I think, position TruStage as the preeminent financial services and insurance company to serve hardworking Americans,” he said. “It’s a march we’ve been on since 2014 and it’s a march we’re on every day.” Looking out over the coming year, he said the challenge will be threefold. First will be economic, with the U.S. economy and the potential for recession and understanding how that could impact the very people the rechristened TruStage will serve. The second challenge will be managing the brand launch as it unfolds. Third, Cuna Mutual has given its workforce of about 4,200 employees the flexibility to work in-person or remotely, and Trunzo said managing this changing workforce will be an evolving process. New Name TruStage, the new name under which Cuna Mutual will operate, isn’t a new identity for the nearly 90-year-old outfit. The company, based in Madison, Wisconsin, was founded as Cuna Mutual Society in 1935 with a focus on moving insurance protection to credit union members who had outstanding loan balances. After World War II, Cuna Mutual Group grew and expanded its offering of services. It launched its Member Direct Program, a direct marketing program for individual life and health insurance, in 1983. As that program matured, the company added homeowners insurance, accidental death and dismemberment and auto coverage in a package that today is known as the TruStage Insurance Program. As Trunzo tells it, the move will streamline the focus on the middle market and allow TruStage to become closer to a one-stop outlet for protection and financial products for a population that doesn’t have the boutique banking and advisers of the high-wealth set. Trunzo said no one is impacted more by the economy than Middle Americans who sometimes live paycheck to paycheck. “The uncertainty, the impacts of inflation. That is a big market segment that we serve quite successfully,” he said. While credit unions were the initial market for the TruStage products, the focus today has shifted beyond the institutions. Trunzo in fact calls them the “lifeblood” of the company. When he stepped into his present role coming out of the sales department, the institutions accounted for about 95% of revenue, he said. That balance is now 60%- 40% credit union to non-credit union following a campaign to grow outside of that space while maintaining it as a focus. “It made sense for us to leverage that consumer brand which is doing so well and we’re comfortable with that, and also throw down some brand attributes about who we are for hardworking Americans.” According to a Cuna Mutual press release, 2021 was a record year for the company, with $5 billion in revenue, $622 million of net income and $36.7 billion in assets under management. “I can remember back in 2014 when I started, I think we had $10 billion or $11 billion in AUM,” he said. It was also a year marked by headline risk across all sectors of the economy in which Life Insurance 24 BEST’S REVIEW • OCTOBER 2022 Cuna Mutual paid out $1.8 billion in benefits to customers and beneficiaries—including $76.6 million in COVID-related claims. The corporate foundation also gave out more than $7.9 million to nonprofits working on economic stability, education and emergency aid. According to Trunzo, the company has also seen “significant growth” in annuities products tailored to its target audience, with almost $2 billion in deposits last year alone. Its geographic footprint stretches across the United States, with about 95% of credit unions in the country offering at least one of their products and additional business segments in the United States, Canada and the Caribbean. To further its reach in that market, in 2021 Cuna Mutual completed a deal to acquire Assurant’s prearranged funeral insurance and final expense business in the United States and Canada for about $1.3 billion. The deal brought more than 2 million customers into Cuna Mutual’s fold and grew its middle-market presence. “It was a check-the-box acquisition for us,” Trunzo said. “We were familiar with Assurant, we have a long-standing business relationship with Assurant on other products we market to credit unions and Assurant is the underwriter for us.” The company had its eyes on the Assurant business for about five years prior to the transaction, Trunzo said. Cuna Mutual has also proven its ability to successfully engage in partnerships that include Liberty Mutual and the Navy Federal Credit Union, down to more local church and fraternal institutions. The company’s status as a mutual organization in which policyholders technically each own a small piece will not change as part of the shift, Trunzo said. The structure stands in contrast to public companies, which are required to issue quarterly financial reports and focus on operations three months at a time. “The mutual status for us is very important because we’re born out of that community, obviously, with credit unions,” he said. “We’re a mutual company with strong public company principles. So we want to throw up good numbers because that allows us to invest back in the company.” Cuna Mutual’s focus won’t shift with the rebranding, Trunzo said. What will change is that having one corporate entity will simplify the process for both policyholders and the organization, he said. “What we’re trying to do is serve Middle Americans—hardworking Americans—in every segment of their life,” Trunzo said. “We’re trying to take them from A to Z—a life insurance policy when they’re younger. They might want to protect a loan as they get a little older in case something happens to them. If they accumulate some wealth we want to help them and be on the back end to make sure they preserve that wealth and use that wealth appropriately.” The company “has to get this right,” Trunzo said. Any rebranding is a massive internal project involving every sector of a company from operations to legal, marketing, the investment ledger and employees themselves, Trunzo said. When the name switches over early next year, it will be the culmination of two years of work done in several phases, Trunzo said. “At the end of the day, this unites all of our diverse brands into one powerful brand,” he said. “It is a massive effort.” BR “We have no desire to move up, up, up market. We’re quite comfortable serving the hardworking Americans and we’ve had great success doing that.” Robert Trunzo Cuna Mutual Group25 BEST’S REVIEW • OCTOBER 2022 Auto Insurers F or more than a century, carmakers and automobile insurers have largely kept to their own lanes. That was before data ruled. In 2022 data and technology have inspired the automobile industry to get more involved in the insurance side Renée Kiriluk-Hill is an associate editor. She can be reached at renee.kiriluk-hill@ambest.com . Key Points The Big Picture: Carmakers are beginning to step into the auto insurance business. Strategy: The move offers a way to gain and maintain market share in the highly competitive personal auto insurance space. Why It Works Now: Technologically advanced cars collect driving data that can be used to streamline auto insurance coverage. Automakers Build New Insurance Future As data and technology pervade the car manufacturing industry, automakers have made fresh inroads into insurance. by Renée Kiriluk-Hill Chen Zhuo/VCG via Getty ImagesAuto Insurers 26 BEST’S REVIEW • OCTOBER 2022 of the ledger, prompting an increase in the number of inter-industry partnerships and more. For auto insurers, partnerships and other steps car manufacturers have taken to edge their way into the insurance industry offer a way to gain and maintain market share in the highly competitive personal auto space, AM Best Senior Director Richard Attanasio said. Offering products directly and at the point of a vehicle sale brings carriers an avenue of distribution with potentially lower expense levels and additional insight that can help set rates, he said. Insurers working closely with manufacturers agree that they benefit from access to new data and driving behaviors, and how that impacts losses as automation advances and interest in electric vehicles surges. And carmakers who establish their own insurance operations can acquire a “natural feedback loop on driving patterns, effectiveness of safety features, etc., which allows them to further hone their product to meet customer expectations,” Attanasio said. Points of entry vary by manufacturer and even by country. For instance, Tesla progressed from broker to fronting agency partner to insurance subsidiary. Swiss Re and BMW collaborated to craft a vehicle-specific insurance rating parameter for primary carriers globally to calculate premiums. Some carmakers, like Toyota, are building out insurance brokerages. Others teamed up with carriers on embedded products. Toyota overtook Ford as the leading car brand in the U.S. last year, based on 1.9 million vehicle sales, according to market and consumer data company Statista. Ford had 1.8 million, followed by Chevrolet’s 1.5 million. Nationwide has partnered with the top two, as well as startup electric “adventure” vehicle Rivian. Nationwide gains knowledge and strengthens trust by expanding original equipment manufacturer partnerships, said Senior Vice President of Corporate Development Angie Klett, creating “a relationship within their ecosystem that builds upon the customer having the say, the power and determining the path of an experience.” Carmakers and insurance partners today take a customer-first approach that varies from company to company, said Klett. Choose a manufacturing partner carefully, she advised, with an eye on aligning values and strategies. Each side decides direction for the insurance product, such as if, how and when to embed insurance in the buying process. Klett said embedding is most strategic for manufacturers with a niche market, where customers think a company like Tesla or Rivian has a better handle on the needs of their vehicles’ owners. “They’re direct-to-consumer OEMs. The buying, the servicing is different. It’s not the same as a Ford or Toyota,” said Klett. Specialized manufacturers, such as Rivian, are notably invested in streamlining the entire car- owning experience, said Sarah Jacobs, Nationwide vice president of personal lines product development, and will lean into the process. Toyota Financial Services is an owner of independent property/casualty insurance agency Toyota Insurance Management Solutions (TIMS), which distributes product from multiple carriers. Will Nicklas, president of Toyota Insurance, acknowledged manufacturers’ earlier reluctance to enter the highly competitive auto insurance market in the United States. “But I think when we decided that cars were going to be connected, and there were going to be a lot more services that we could provide to customers, it made a lot of sense,” he said. “When you think about how insurance plays a role in car ownership, every six months, maybe every 12 months, a customer is renewing an insurance policy. We saw it as a gap in the ownership experience.” Nicklas thinks of TIMS as “this new, connected tissue, or this glue that’s bringing these two industries together” for a “really powerful collaboration.” According to the TIMS website, working with Toyota companies and external partners allows the broker to harness data and technology to “improve safety, convenience and save customers time and money.” The Counterpoint Some insurance industry experts think the partnerships are helping carriers and manufacturers, but they doubt Tesla will inspire other carmakers to become underwriters. They cite the complexity of regulatory approvals, particularly in the United States, and profit and loss swings in auto, even among large, legacy insurers. Risk Information Inc. Editor Brian Sullivan put it bluntly: “There is no advantage at all to a traditional auto manufacturer owning a traditional insurance company.” Jacobs said regulatory work can’t be underestimated. Insurance is “very challenging to break into.” Barriers are a little easier to clear in some 27 BEST’S REVIEW • OCTOBER 2022 global countries, particularly with a carrier partner. Volkswagen Autoversicherung AG was founded in 2013 as a joint venture between Allianz Versicherungs-AG and Volkswagen Financial Services AG. Volkswagen Autoversicherung AG offers auto insurance in Germany as a primary insurer. In about 30 other countries or markets VW is an insurance broker, the company said. “The technology of the cars, especially the car data, gain an increasing importance for the development of our motor insurance products,” a Volkswagen spokesperson said. “For example, in Germany the safety features of the cars have a direct influence on the motor insurance pricing.” The company hopes to gain telematics experience and integrate insurance offers into VW on-board systems. Brandy Mayfield, senior vice president and managing director, digital economy for Aon, said partnerships between manufacturers and insurers offer an attractive middle ground. “As manufacturers build differentiated products, they want to make sure carriers have capacity to insure newer/different technology. Manufacturers also want to minimize friction in the insurance purchase journey and create continued revenue streams from their buyers,” she said. On the other hand, she said, “shifting from acting as a broker to an insurer presents a significant leap in terms of regulatory complexity, capital intensity and moving the brand into a new category with mixed views from consumers.” “For original equipment manufacturers to make that investment there will have to be a clear opportunity to differentiate from traditional insurers or meet truly unmet needs in the marketplace,” she added. “Carmakers must determine what they’re solving for by setting up their own insurance structure: more clients, a differentiated insurance product, etc. Many also want to capitalize on profits from the insurance space.” Carriers can grow a book for certain auto types more rapidly than in the traditional market, she said. Customers may get improved access to parts and repair services, increasing satisfaction with insurers and carmakers. Doubly important for newer vehicles with limited production is “a network to quickly obtain parts and repair is key,” said Mayfield. Tesla’s push into insurance was reported to be motivated by reducing the cost of ownership. Repair costs ran higher because fewer technicians are familiar with the connected, electric vehicle. Tesla was known for supply chain challenges even before the pandemic, extending repair times. “Other manufacturers could take a similar approach and offer insurance directly,” Attanasio said, although it would require a significant amount of industry knowledge and infrastructure, including a high level of product/pricing sophistication and policy administration and claims capabilities. Entrepreneur Elon Musk drew distinctions between how automaker Tesla Motors’ insurance operations cover auto risk compared to the traditional insurance industry, which he said suffers from too many players extracting part of the premium along the insurance value chain. “Insurance is quite significant,” Musk, Tesla’s chief executive officer, said recently. “The car insurance thing is a For auto insurers, partnerships and other steps car manufacturers have taken to edge their way into the insurance industry offer a way to gain and maintain market share in the highly competitive personal auto space. Richard Attanasio AM BestNext >