I’m concerned about the recent delay in setting rules for the medical loss ratio (MLR) provision of health reform. With the implementation set for January 1, 2011 there is not much time for health insurers to develop their plans for next year.

Under the health reform rules, insurers are required to spend 85 percent on medical care for every premium dollar received from group plans, and 80 percent for premiums received from small group and individual plans. HHS (US Department of Health and Human Services) is charged with managing the development of the rules and guidelines. It has asked NAIC (National Association of Insurance Commissioners) for their recommendations on how to calculate and implement the MLR requirement. They have missed their target of June 30, 2010 to have rules in place. In their defense, it is complicated.

Because of the delay, a political fight is developing over the issue. Senator Al Franken is calling for vigilance to make sure the insurance industry doesn’t define medical expense as everything that is not profit. He has cited the recent announcement by Wellpoint to reclassify $500 million in administrative expenses such as health and wellness, nurse hotline, smoking cessation and weight loss programs as medical.

I’ve noticed in Comperemedia a recent letter to Assurant producers notifying them that, because of the uncertainty of the MLR rules, Assurant will reserve the right to change commissions for next year and is placing a temporary limit on first year commissions. With this uncertainty stretching well into next year’s planning cycle, I’m wondering if it is more than simply constraining planning or if it is having a material affect? More importantly, has the concern about MLR’s impact on commissions caused policy sales to slow?

Thank you to everyone who attended my webinar yesterday on the impact social media is having on insurance marketing. If you missed the live webinar but you’d still like to download a copy of the slides and/or recording, click here.

Listeners asked a good number of thought-provoking, intelligent questions so I’ve answered them below. Please, if you think of any further questions, feel free to contact me at dhayes@mintel.com or visit www.comperemedia.com.

Where is Allstate in the flow of Social Media?

Allstate has developed its presence as well. I chose to focus on State Farm because they captured my attention with their focus on both the young and Spanish-speaking markets. Allstate actually has more followers than State Farm on their Facebook page. And Allstate is doing a good job of placing information on their page to keep followers informed about hurricane Alex.

Are social media comments posted by the public on insurer websites considered to be advertisements by insurance regulators? If the answer is yes, does it apply to all posted content or just the ones that the company might use in its advertisements?

Good question. Since social media is generally an open forum when someone says they think a product is great, it’s somewhat out of the control of the company. Yet these comments could be considered testimonials and should be restricted. I’m not aware of any rules on this. At this point I think most companies are being cautious by monitoring what is posted and may be taking down comments that are too specific.

How do companies define and manage the risks associated with SM? Most employees don’t attempt to do direct mail, for example, but many of us are on SM.

Companies are starting to develop guidelines for the use of social media. The basic rule of thumb right now is to “act professionally.” You are right, once an employee puts the company on their Facebook or Linkedin page, they will be viewed as a representative of the company and that could present problems. So they should be reminded that they should not do anything that they would not do in a presentation to clients.

Do you feel the Humana independent social media development is a good idea?

It’s a way for them to control who has access to their content. It could have the same familiarity as traditional social media tools. A drawback to limiting access is the loss of exposure to potential new clients.

Do you see social media connecting toward business offers just like direct mail does? Or avoiding “to much” of a business approach?

For now I recommend avoiding a direct sales pitch as the best approach on social media. The use of social media is still primarily entertainment and keeping connected with friends and family. But behaviors change. As the use of social media tools become more sophisticated, consumers may become more accepting of a sales message.

What tracking matrices do you see happening or being particularly effective?

The number of unique visitors, where they come from, how long they stay, and certainly if they request a quote are all important stats to capture.

How are SM efforts well suited to “going green” vs. DM?

Unless someone is printing all of the posts they write and receive, and assuming that people properly dispose of old devices, there is no doubt that social media lowers the carbon footprint of marketing.

How is State Farm leveraging Social Media at the agency level? How can they control the content from their exclusive agency force?

I see a lot of State Farm agents with their own URL listed on the direct mail piece. I’ve noticed that State Farm agents are often part of community boards and volunteer efforts. I think these same skills are easily transferred to social media behavior

How can an insurance company that markets through a business/association entity use social media?

You can help support the business/association by providing content to support their efforts to create a presence through social media tools. If the insurance company wants to maintain a behind the scenes role the best thing it can do is help make their representatives as relevant as possible. You should do all you can to help build up the social media reputation of your producers to get noticed on the internet. The best way to do this is to feed them fresh and interesting content for them to post on their site.

When do you expect Health Care reform to impact DM volumes? Early 2011 or yet this year?

I definitely think a change is going to happen this year. Medicare is going to change the mailing cycle around enrollment. But for individual health policies, I don’t think there is going to be a major change this year or next.

How costly is it to “develop your own tools”?

Developed tools can vary from an iPhone app to an entire new internet presence. The costs can range from what is required to customize a vendor’s standard product to ground up development. There is also the consideration of maintaining the new tools with current staff, additional staff or outsourcing.

Could anyone explain any best practices observed in types of direct mail (postcards, letters) and what would be a good way to using this channel in order to direct traffic to social media?

There is an easy first step. Put the fact that you have these tools available and how to get to them on the direct mail piece. I’m still surprised how seldom this information is printed on the mail piece. I think direct mail is going to remain very important, but it can also be used to drive consumers to a website and social media tools. Make the information in the mail interesting, something the recipient may want to hold onto. Not too much detail is needed. Let the details become something the consumer will be curious about and a reason they will want to visit your Facebook page or website. And if you can, incorporate some type of participation. If they can vote for a charity or personally get involved, they may spread it around to their friends.

How do you guys see companies best using Twitter?

This is why I liked the example of New York Life tweeting about the Big East Conference. This is a way of creating an event—something for people to participate in that gets them to associate your brand with an event they will remember.

Please join us for a webinar entitled “Insurance Marketing Mix: Social Media’s Effect on Direct Mail” with Daniel Hayes, Vice President of Insurance Services at Mintel Comperemedia.

June 30, 2010
2pm CDT / 3pm EDT
Register Here: http://bit.ly/bMwxY2

Mintel Comperemedia—which tracks direct mail, email, online and print advertising—has seen insurance companies and producers beginning to participate in social networking for business gain. Insurers are trying to catch their customers and potential customers in the right place, at the right time…and right now, they’re finding them on social media networks.

During this webinar, Daniel Hayes will examine the use of social media by insurance companies and the effect it will have on the role of direct mail as a trusted marketing tool. Expect to:

- Explore the way social media is changing insurance direct marketing as a whole
- Identify how insurance companies and producers are changing the way they communicate with customers
- See examples of how insurance companies are mixing direct mail, email, print and online advertising
- Examine marketing messages that are designed to strengthen brand value

Mintel Comperemedia’s PR team recently put out a press release about how insurance providers are inching their way into social media. Read that release here: http://bit.ly/bOJ209

To learn more about Daniel Hayes, please read his biography and some of his recent blog posts: http://www.comperemedia.com/blog/daniel-hayes/

For me the highlight of the Digital Marketing Days Conference held in New York this week—Mintel Comperemedia was a sponsor—was listening to Thomas Hoehn, Director, Interactive Marketing and Convergence Media at Eastman Kodak. In his session entitled “Your Brand Deserves More Conversation,” Thomas showed how Kodak is a leader in social media marketing. As financial services companies grapple with social media, they could do themselves a big favor by looking at Kodak for an example of best practice.

Kodak has transformed itself, in recent years, from being a traditional “film” company into being a “digital” company. This was primarily an issue of consumer perception. After all, when we think of Kodak we think of a “Kodak Moment” – a phrase first used in 1961 which was meant to represent a special memory captured on Kodak film.

However, not many people know that Kodak was a pioneer of the digital camera business and actually invented the first digital camera in 1976. Fewer people know that, because of Kodak’s digital technology, it was able to provide the only television pictures of the Tiananman Square Protests in 1989.

A key part of the Kodak strategy involves social media, and the company stands out as one that has truly welcomed social media into its marketing mix. Kodak produces four blogs—it has been blogging for four years—and is always seeking new and creative ways to utilize the full range of social media tools.

Thomas Hoehn passionately believes that the worst thing consumers can say about you is nothing. Positive and negative comments about your brand, products or category abound in social media and both can provide marketing opportunities.

He handed out a color booklet entitled “Social Media Tips” which has been produced as a guide for vendors and partners of Kodak. The booklet includes Kodak’s social media policies as well and an outline of the company’s “Convergence Media Tactics.” It provides fascinating insight into Kodak’s approach to social media. He also handed out a booklet entitled “Mobile Marketing Tips.” You can download both booklets and review Kodak’s social media marketing efforts at http://www.kodak.com/US/en/corp/ourCompany/index.jhtml?CID=go&idhbx=followus.

To see how Kodak has recently updated its “Kodak Moment” campaign for social media, go to http://www.youtube.com/watch?v=HA9puP2f6Fs.

There are rumors that Medicare is going to experience significant marketing changes.
According to a report from a CMS User Call, the Annual Enrollment Period (AEP) will remain unchanged this year, from November 15, 2010 to December 31, 2010, for enrollment effective January 1, 2011. However, next year this will be changed to October 15, 2011 to December 7, 2011, for 2012 enrollments.

There is no indication that the window for marketing to Medicare participants will change. Currently that window opens on October 1.

Additionally, the Optional Enrolment Period (OEP) is going to be replaced with an Annual Disenrollment Period (ADP). With this conversion, the consumer will only have the option to change or drop their Medicare Advantage program. If they drop, they may enroll in original Medicare and elect a qualified prescription drug plan (PDP). This begins on January 1, 2011, so,no longer will there be a need to market after the December 7th date.

What will all this mean for marketing efforts? It seems there is going to be a very short, intense recruitment period at the end of the year.

In the past several years, Mintel Comperemedia has tracked significant growth in what has been a six month, October to March, Medicare mail period during AEP and OEP. Last year continued a pattern of large mail volume increases by posting a 24 percent increase over the same period the year prior.

Have you made plans to adjust your marketing campaigns for Medicare, especially if the marketing period shrinks?

To learn more about Medicare marketing, contact www.comperemedia.com. We can use our database of direct mail, email, print and online advertising—combined with expert insight—to help you understand and anticipate marketing trends.

I’ve been thinking about whether social media sites deserve all the attention they get from insurance marketers. I don’t mean that social media isn’t important. I’m just wondering if there is a need for urgency in the insurance sector.

Many insurance companies have created, or are in the process of creating, a profile on Facebook, Twitter and LinkedIn. More and more insurance direct mail and email pieces captured in Comperemedia have social media icons on them, and ask the recipient to friend and follow the company. I’ve noticed that one popular company’s Facebook fan base has grown by about 26 percent in a little over a month.

Yet, fan numbers on Facebook for insurance companies are small, and followers on Twitter and LinkedIn are even smaller. For example, one leading auto insurer has around 14,000 Facebook fans, less than 100 LinkedIn connections, and nearly 6,000 Twitter followers. Given its market share, this insurer is not going to see social media influencing sales performance.

The focus of most social media sites is entertainment and information, so it is not considered proper to post a sales pitch to your followers. Marketers generally recommend that companies using social media for business reasons develop a dialog in which they become an expert advisor.

While I agree with this, I’m left wondering: how is the effectiveness of social media efforts being linked to sales? The measures talked about—inbound links, site visitors, clicks, followers, SEO—don’t necessarily tie to a new policy sold.

Please add your thoughts to this post. I’d like to avoid the hype and discuss what companies are developing as best practices. Let us know if you think social media is important today to a comprehensive insurance marketing campaign, or when you think it will be: 5, 10 or more years into the future. And when social media becomes established in insurance marketing, how would you recommend measuring its impact?

Acquisition mail for Medicare increased for the October 2009 to March 2010 period by about 24 percent over the same period a year ago. Medicare mail has been the largest driver in a steady increase in health insurance mail that has grown at an average annual rate of 5 percent each quarter since second quarter of 2007.

Estimated mail volume

Two companies that continue to lead the list of largest mailers are Humana and UnitedHealthcare. These two companies accounted for almost 50 percent of the mail sent out for this year’s enrollment period. Humana was the leader with 26 percent of the mail, which was a 12 percent increase over 2009. Close behind, UnitedHealthcare increased its mail by a remarkable 42 percent over 2009, contributing almost 21 percent to this year’s total.

Kaiser Permanente came in a distant third with 4 percent of the total mail sent out for 2010 enrollment. There were several other companies close to Kaiser Permanente in this ranking, but Kaiser Permanente is significant in that it increased its mail volume by 87 percent over last year.

Innovative mail campaigns

Humana’s largest campaign was a letter with a flyer and a brochure. The white envelope features a yellow post-it with a checklist—Service, Savings, Valuable Extras—and a prompt to “Look inside!” The letter goes into detail on how Humana satisfies these needs and that the reader will get more information when they call for the Humana booklet. The flyer is interesting with one side for those that have an existing Medicare supplement plan and the other side is for those that do not.

One of AARP and UnitedHealthcare’s largest campaigns was a multifold one piece with the recognizable red wave. The headline on this piece asks the reader if they are “Expecting changes in [their] health insurance benefits in 2010?” Inside the AARP name is prominent in many of the callouts and bolded statements.

Kaiser Permanente sent a picturesque one piece mailer for one of its largest campaigns. With half of the printable area taken up by three pictures, the text presented uses bullet points and plenty of white space. This campaign really stands out from most of the mail that is sent into the Medicare market space by the simplicity of text presented.

It will be hard to tell in which direction health insurers may modify their Medicare mail strategies for next year. Will healthcare reform prompt them to increase mail volume to explain changes to their products? Or, will they continue to pursue the strategy of the past several years that increases mail volumes in an effort to increase market share?

It is certain that the replacement of the Optional Enrollment Period with the Annual Disenrollment Period is going to have an impact on the amount of mail and type that is sent out at the start of next year.

The iPad is dominating our national attention, being described as the precursor to how we will use computers and communicate in the future. Whether you believe this or not, the iPad has inspired a flurry of innovation. Insurers are determined to get onboard.

This year, insurance companies continue to announce newly developed apps, targeting the majority toward auto policy holders. Last month, Travelers added itself to the list. Named “Auto Accident Help” for the iPhone and “Quick Connect” for the BlackBerry, Travelers apps are free for download. The apps can be used to ument the misfortunes of an auto accident, and if the incident is being documented by a Travelers policy holder, the auto claim process can be started immediately through the same app.

Many other insurance companies developed smartphone capabilities last year. Now, the trend is toward integrating insurance agents into the communication channel.

Universal American seems to have taken the lead by creating an app that lets the agent connect to its Lead Management System. In an email to agents, Universal American briefly talks about how the agent can manage and access active leads anywhere, at any time.

Additionally, Progressive proactively helps its agents develop an Internet presence. Progressive’s recent “Agency Reporter” tells agents how to improve Internet sales opportunitiesm including creating and optimizing a website and communicating via Twitter. Progressive writes about a discounted website development and hosting fee available to agents through its partnership with Web.com.

In a recent Mintel Comperemedia survey of agents, almost 25% responded that getting leads “is the biggest challenge [they] face as an insurance agent.” With this being the main struggle for agents, it seems that Universal American and Progressive have developed a couple of killer apps. The more insurance companies can help their agents find and nuture leads, the better they’ll do.

Progressive has all but stopped acquisition mailing. In 2009, they sent 90% fewer offers than in 2008. So far this year, Mintel Comperemedia has only tracked one auto insurance piece from Progressive. It was a card mailed by Florida Insurance Specialists to clients with a homeowner’s policy and offered a discount for Progressive auto insurance.

Progressive’s strategy to stop using direct mail is the opposite of GEICO, State Farm and Allstate, all of which have increased efforts. These auto insurance leaders have either maintained high mail volumes or increased mailings since last year.

GEICO, the largest auto insurance mailer, sends a letter as its top offer. Interestingly, it is not branded with any of the characters GEICO has developed. It does, however, have a call-to-action header: “Do not discard this letter without first visiting geico.com.”

Allstate and State Farm are next after GEICO. Each sends letters that feature a quote card, a box showing savings over the competition, and an agent’s phone number.

Maybe the reason Progressive has stopped mailing is because it is enamored with the overwhelming success of Flo and the Insurance Superstore campaign. But State Farm, Allstate and GEICO seem to be increasing direct mail alongside successful campaigns in other media.

How long will Progressive maintain reduced direct mail as part of its marketing strategy? Please contact me if you’re interested in exploring this idea further (DHayes@Mintel.com).

Green insurance has been a growing trend in recent years. And now, as Earth Day approaches on April 22, Travelers has launched a new campaign for its GreenHome Upgrade.

Green homeowners insurance covers an additional expense amount for the repair or rebuilding of the home with green materials and methods. It pays for the cost of recycling debris in preference to dumping it into a landfill. And, it will pay the fee to certify or re-certify the home to LEED certification requirements after a covered loss. (LEED stands for Leadership in Energy and Environmental Design Green Building Rating System.)

Travelers’ new campaign was announced last month in an informational marketing email to agents. The PDF kit, sent with the email, included a brochure, postcard, agent sell sheet and FAQ. The agents can order brochures and postcards that will be printed on recycled paper, or they have the option to send these electronically as an ebrochure or ecard. Travelers also announced that this would be supported by an online media campaign.

One of the first companies to offer energy-efficient and environmentally innovative products was Fireman’s Fund. Direct mail for its Green Upgrade policy talks to the cost advantages, healthy living, and environmental sensitivity of going with environmentally friendly construction alternatives when replacing damaged equipment and materials.

Discount for a home that has already been LEED certified is another way some insurance companies have built green insurance products. Travelers includes a discount option in the new campaign mentioned above. And Farmers also mentions a LEED discount in a side box on their informational mailing to consumers.