Fully online insurance company Sonnet is the “first step in a multi-step journey” and the learnings from that process will be applied back to other parts of Economical Insurance’s business, Economical senior vice president and chief marketing officer Michael Shostak said last week.
“Everything we did with Sonnet, whether it was the customer insights or the analytics capabilities or more sophisticated pricing capabilities, the technology… everything was just a starting point,” Shostak said on Thursday at the CIP Society Symposium 2017. “The next phase is applying all of that, the platform, the learnings, the capabilities. You can benefit from our experience in building Sonnet. We’re happy to share those learnings because they’re equally applicable in the broker business,” he said by way of example.
One important lesson learned was sticking to the vision of Sonnet as “a different kind of insurance company, a different kind of insurance,” Shostak said during a session titled Breaking the Rules: Differentiating for Success. “Part of our mission, our vision, was really, ‘How do we change the insurance experience for consumers given all of the research we saw that shows the process is kind of not working?” he asked.
Focusing on that vision helped Sonnet stay grounded. “We found very early on in this Sonnet experience that if you don’t centre yourself back to that vision, you will drift and end up somewhere you don’t want to be,” Shostak said.
As an early example, the team developing the new direct online channel looked at the idea of service fees. “From a consumer point of view, let’s go back to our vision and try to simplify process,” he told symposium attendees. “What would happen if we actually eliminated the service fees?”
When that option was broached, Shostak related, “there’s this gasp in the room,” as some people in the room estimated that the business would lose about $30 million. “But what’s it worth to us to make such a better experience and abide by our original vision?” he asked. “What’s that worth? Let’s do it – we’re going to kill service fees. Thirty million dollars gone because we went back to our vision.”
As another example, the team also asked why do consumers typically have to answer 30 to 40 questions to get a property insurance quote. “We got our property [quote] down to five questions, used data, analytics and a bunch of sophistication to automate the process,” one that now takes a minute to a minute-and-a-half, Shostak reported. “We really need to simplify the process and eliminate the mystery, make it easy, plain language,” he said. “So simplicity was a way for us to differentiate ourselves.”
The second way for Sonnet to differentiate itself was around the brand, Shostak said. “If we’re going to have such a different experience, we need to have a different brand to stand out. It humanizes us as an insurance company,” he noted. “We first have to believe we are a different kind of insurance company. Promise to do things different and deliver on that experience has really helped us stand out very quickly in our journey. In the P&C space, it is a sea of sameness.”
In the end, Shostak says, “we were really imagining what that customer experience looks like and creating something that is unique in the marketplace. Maybe we’re bold, maybe we’re naïve, time will tell. At the end of the day, there was no playbook that guaranteed success. It was a big bet and an expensive bet.”
Also speaking at the session was Andrew Clark, president and CEO of ALIGNED Insurance Inc. and Jeff Somerville, president of Strategic Underwriting Managers Inc.
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