M&A fever: Three ways insurance companies communicate transition

A flurry of mergers has overtaken the insurance industry in one of the most active M&A periods in recent memory. ACE Ltd purchased Chubb in a $28.3 billion deal, the largest deal for the property & casualty category since the 2008 bailout of American International Group, Inc (AIG). Two days later, another merger announcement rocked the health insurance space, when Aetna entered into an agreement to purchase Humana for $37 billion in cash and stock.

But the list doesn’t stop there: Willis announced an $8.7 billion deal to acquire Towers Watson, Centene Corp agreed to buy Health Net for $6.3 billion, and Anthem and UnitedHealth Group were both looking to bid on a purchase of Cigna after an earlier bid from Anthem was rejected. If you lost track, that is a total of five possible high profile insurance mergers in the last three weeks alone.

With all of this activity, it is no surprise that industry experts are already making predictions across articles, blogs and similar forums about the direction these shakeups will take the industry as a whole. Many are speculating on how the health insurance market might change as insurers consolidate on the heels of the Supreme Court ruling solidifying subsidies. Others question antitrust issues in an environment where too much consolidation might limit consumer choice.

A quick Google search can generate both an influx of information on the subject, as well as concern for how this may play out over the next 12-18 months. As consumers already lack trust in insurance companies – Mintel found that only 39% of consumers trust insurance companies, much lower than other financial institutions like banks – it’s clear that the way these changes are communicated to policyholders and prospects alike could greatly impact consumer sentiment.

Below are three ways brands can build trust, maintain loyalty and shape conversations about the changing landscape moving forward:

1. Maintain brand transparency in marketing

When ING US transitioned to Voya, it used a series of marketing campaigns that clearly identified the company first as ING US transitioning to Voya Financial, then as Voya Financial formerly known as ING US, and finally as Voya. By stair-stepping the marketing they were able to communicate with consumers who they were, who they were becoming, and eliminate any confusion about the brand. Not only is a strategy like this helpful for building trust, but it eliminates confusion and projects a transparent image to consumers.

56% of consumers admit that online reviews help in product and service decision making

2. Capitalize on online forums

Another way to maintain transparency is to participate in online discussions. According to Mintel research, 54% of consumers turn to the internet first when they are looking for information. More specifically, online reviews are an important way for consumers to validate their choices and opinions. According to Mintel’s American Lifestyles 2015 report, 56% of consumers admit that online reviews help in product and service decision making.

Providing a place online that not only answers questions but offers a forum for two-way communication between the brand and its customers could both establish trust and maintain loyalty. Brands should be ready to openly address some of the challenges that may occur and offer solutions and support that can neutralize any frustration consumers may encounter.

3. Take the focus off price

As companies consolidate, brands will need to find ways to distinguish the new company from others, outside of a price comparison. Non-insurance benefits that are trending in the industry today include things like usage-based insurance to monitor driving habits, health & wellness trackers, digital platforms including video chat capabilities that make it easy to interact with a company, and rewards programs that offer both policy rewards and rewards such as travel & entertainment packages.

These additional policy features can provide tangible benefits when talking about an abstract product like insurance, which in turn provides an additional reason to engage with and stay loyal to the company. The more relatable and user-friendly a product like insurance becomes, the more likely a customer will stay with the company, even through periods of transition, such as a merger.

What’s next?

While these ideas can be applied industry-wide, companies who are experiencing a rebranding or acquisition should be particularly mindful of how communication with policyholders during a time of transition may impact retention and loyalty in the future. The insurance industry is in the midst of great change, both from a M&A standpoint and also with respect to innovation. As companies consolidate and new entrants emerge, the customer experience, and any communication about that experience, must not get lost along the way.

Stephanie Roy is the Director of Insights, Insurance at Mintel, focusing on all insurance sectors for Mintel Comperemedia. She is responsible for providing internal and external stakeholders with insights and analysis on trends in the Life, Health and P&C insurance industries.