Last year Geico and Progressive (G&P) wrote 52% of new auto policies in the US, outperforming the entire rest of the industry. This is an incredible result in an industry with well over 100 competitors. Yet many strong companies have been making strenuous efforts to upgrade their competitiveness for years. Clearly it hasn’t worked. So what have competitors been doing? There have been three generic initiatives that carriers have been investing in either individually or in concert.
Diversify Distribution Challengers can charge into online distribution and expand into new geographies. Many carriers have tried this approach but the results have been uniformly disastrous due to high levels of fraud that they can neither see nor stop. To stem the losses some carriers have turned to radically selective strategies which work but only at the cost of making the direct channel so small that it doesn’t matter.
Aggressive Marketing and Brand Building With enough branding and marketing spending challengers should be able to take some of their lost market share back. But there are two problems: first it’s hard to justify high levels of marketing spend when the customers it attracts lose so much money to fraud and misrepresentation. Second, brand building is a long term strategy and given that G&P are already winning more than half of the market, carriers just don’t have the time to spare.
Attack the Point of Sale Fraud Problem Directly If the reason carriers can’t make money in new markets and channels is fraud, then the most direct approach would be to focus on reducing that fraud. By prioritizing fraud fighting, carriers can master their profitability problems, allowing them to justify major investments in new channel, market and brand building initiatives. Without substantially reducing the massive levels of fraud it is hard to see how carriers can get away with doing much of anything in auto.
The Critical Ingredient So how did Geico and Progressive pull so far ahead? We believe one reason is their approach to innovation. Both companies are continually experimenting. They run countless test programs to find new and better ways to compete. Carriers who want to compete with them need to develop similar preferences for controlled experimentation and risk taking.
And there isn’t much time to get this right. What Geico and Progressive took many years to perfect, other carriers must do in a fraction of the time. That’s where VeracityID comes in: we have developed and are delivering profitable solutions to many of the most common and costly auto insurance fraud problems.We also provide the right tools and expertise to help carriers find and resolve their next major problem.
Simply put, VeracityID is the best and fastest alternative for carriers who want to be competitive in auto insurance. Let us show you how.