Paragon Advisory PC Auto Mobile Capabilities Report by Subhash Chandra

Paragon Insurance Advisory Services‬‬ Report on Carrier Mobile Capabilities in Personal Lines Auto Business

December 2012

Erik Mann, Director Insurance Advisory Services

Introduction

• Ongoing and increasing competition in the personal auto insurance markets • Carriers struggling to differentiate other than on price • Servicing remains one of the last areas for real differentiation • Market increasingly segmenting: o

Large national writers with strong direct/captive capabilities and heavy investment in customer-facing technology

Mid-Tier and local writers relying entirely or largely on independent agent model with more investment in agency integration, agent marketing, etc.

Question: How do mobile offerings factor into customer-facing servicing capabilities?

Part 1 - Mobile Support Availability

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Our Approach

Paragon conducted a research project to identify and analyze the consumer-facing mobile offerings from a mix of large and mid-sized carriers with significant business in personal auto insurance. The research was conducted in our offices leveraging the carriersâ&#x20AC;&#x2122; websites, app stores from Apple and Google, and social media sites including Facebook and YouTube. Apps were downloaded and tested, including establishing logins and using protected features where possible by leveraging Paragon staff who were/are policy holders of the various carriers. The focus is on servicing capabilities for existing policy holders - not acquisition of new customers. No carriers were contacted for this report.

Copyright ÂŠ 2012 Paragon Solutions, Inc. The information contained herein is proprietary and may not be distributed without permission from Paragon -4-

Carrier Survey Population

• Selected 20 carriers with a significant percentage of business in personal auto

• 10 Tier 1 carriers o

Revenue in excess of $2B

Top 15 in NAICS premium written ranking for 2011 personal auto

• 10 Tier 2/3 carriers o

Tier 2 $500M to $2B total revenue

Tier 3 less than $500M total revenue

• Total coverage in report is in excess of 50% of US personal auto premium

Mobile Offering Analysis – Methodology • Researched all 20 carriers by: Visiting websites, both traditional and mobile o Searching app stores for mobile devices – Apple including iPhone, iPad, iPod Touch – Android – Blackberry – Microsoft o Downloading and test-driving apps o

• Catalogued availability of offerings Platforms supported o Features o Qualitative rating o

Mobile Support - Availability • App Gap 90% of tier 1 carriers support at least one mobile device o Only 40 % of Tier 2/3 carriers support at least one mobile device o

Percentage of Carriers with and without mobile app offerings

• Many tier 1 carriers support multiple platforms • Most carriers across all segments support mobile browser Conclusion: Tier 1 carriers have significant lead in ability to support mobile interaction in personal auto market

Tier 1 Carriers - Mobile Support Availability

Platform Mobile Site

Allstate Yes Mobile site, only "most-used" features initially dislayed

State Farm Yes

Erie No

Farmers Yes

Mobile site, only Standard website Mobile site, only "most-used" "most-used" features initially features initially dislayed; option to dislayed; option to go to full site go to full site

iPhone App

Yes

(Initial display is app download; can proceed to mobile site)

Progressive Yes

Nationwide Yes

Liberty Mutual Yes

Mercury Yes

USAA Yes

Mobile site, only Mobile site, only Mobile site, only Mobile site, only Mobile site, only "most-used" "most-used" "most-used" "most-used" "most-used" features initially features initially features initially features initially features initially dislayed; option to dislayed; option to dislayed; option to dislayed; option to dislayed; option to go to full site go to full site go to full site go to full site go to full site

Yes

Mobile site, only "most-used" features initially dislayed; option to go to full site Yes

Yes

Need to go to app store; not mentioned in website Yes

Yes

Separate mobile app for Farmers (iFarmers) Android App

Geico Yes

Yes

iPad App

Need to go to app store; not mentioned in website No

Windows Phone 7 App

Move tool only No

Yes

Blackberry App

Yes

Text carrier to get link / download or scan QR code to get mobile app Web link to mobile app for auto

Yes

Scan QR code Yes

Text to download Yes

Yes

Scan QR code Yes

Text for link Yes

Copyright ÂŠ 2012 Paragon Solutions, Inc. The information contained herein is proprietary and may not be distributed without permission from Paragon -8-

Tier 2/3 Carriers - Mobile Support Availability

Platform Mobile Site

Harleysville

Westfield

Selective

Yes

Standard website

Main Street America No

Site is more Standard website Standard website compact, only "most-used" features initially dislayed; option to go to full site No No No

Utica Mutual Yes

Merchants Insurance No

Site (secure, https) is more compact, only "most-used" features initially dislayed Yes

Standard website

Plymouth Rock

Arbella

Amica

Yes

Federated Insurance No

Mobile site, only Mobile site, only Mobile site, only Standard website "most-used" "most-used" "most-used" features initially features initially features initially dislayed; option to dislayed; option to dislayed; option to go to full site go to full site go to full site

Android App

Yes

iPhone App

Yes

iPod Touch App

Yes

iPad App

Windows Phone 7 App

Blackberry App

Yes

Text carrier to get link / download or scan QR Code to get mobile app

Yes

Web link to mobile app for auto

On Plymouth Rock poster ads No

Yes

Referenced in "Customer Service" page and "Claims > Claims Process" page

Reference to QR Referenced in Code in poster "Contact us" page ads and on app to find them on store your mobile device

Copyright ÂŠ 2012 Paragon Solutions, Inc. The information contained herein is proprietary and may not be distributed without permission from Paragon -9-

Analysis - Mobile Support Availability • There is a clear gap in mobile capabilities between tier 1 and tier 2/3 carriers • Tier 2/3 carriers are faced with: Technical challenges related to exposing core policy and claims systems o Competing priorities for IT/Operations attention o Strategic focus on the agent o

• The mobile features and functions offered by the leading carriers are becoming increasingly sophisticated, so the bar is rising Question: Will a lack of mobile capabilities result in a perception of lower service and support levels; more importantly, will it affect retention or customer acquisition?

Part 2: Mobile Features and Functions

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Mobile Offering Analysis – Features and Functions What scenarios do personal auto mobile offerings address? • Connection to the carrier in real time from the vehicle: Accident site claims initiation/support o Roadside support o Proof of insurance/insurance ID cards o

• Convenience of mobile platform for on-the-go policy holders: Account overview o Claims status o Bill payment o Agent information o

Mobile Offering Analysis – Breadth of Functionality How complete are the mobile offerings from Tier 1 carriers? • Breadth of functional coverage ratings: Complete: Carrier covers all functional areas o Partial: Carrier covers most functional areas o Minimal: Carrier covers a very limited set of functional areas o None: No coverage o

Mobile Offering Analysis – Overall Maturity What constitutes a mature mobile offering at the current time? • Maturity rating encompasses: Breadth of platform support o Breadth and depth of functional support o Awareness building and ease of access based on Web, social, and traditional media o

• Based on our analysis Paragon rated the 10 Tier 1 carriers in our survey as follow:

Mobile Offerings Analysis – Overall Maturity Ratings

Rating Area Overall Maturity Platforms Feature Coverage Account / Policy Overview POI / ID Agent Info Billing / Payment FNOL / Accident Report Claim Status Integrated Roadside Assistance Promotes Mobile Solution

On web site Faceb ook Youtub e Twitter

Allstate Leading 3 or more Complete Yes Yes Yes Yes Advanced Yes No

State Farm In The Pack 2 Complete Yes Yes Yes Yes Advanced Yes Yes

Erie In The Pack 2 Partial Yes Yes No No Advanced No Yes

Farmers Lagging 3 or more Minimal No No No No Intermediate Yes Yes

Geico In The Pack 3 or more Partial Yes Yes No No Basic Yes Yeas

Progressive In The Pack 2 Partial Yes No No Yes Intermediate No Yes

Nationwide In The Pack 3 or more Complete Yes Yes Yes Yes Advanced No Yes

Liberty Mutual In The Pack 2 Partial Yes Yes No No Intermediate No No

Mercury Lagging None None No No No No No No No

USAA Leading 3 or more Complete Yes Yes No Yes Advanced Yes Yes

Heavy Yes

Minimal No

Moderate Yes

Heavy Yes

Moderate Yes

Heavy Yes

Minimal No

Heavy Yes

M o bile app ico n at bo tto m o f main page

M o bile app ad (to p), link (mid page, A uto ), ico n (bo tto m) o n main page

Claims sectio n

M o bile app ico n at bo tto m o f main page

M o bile link at bo tto m o f main page

M o re Insurance sectio n

M o bile link at to p o f main page

Yes Yes Yes

No No No

Yes Yes Yes

Yes

Rss channel, Flicker (in More>)

Rss channel, Google +

Rss channel, Flickr, Google +

Yes No No

M o bile app ico n at bo tto m o f main page

"Likes" o nly in A uto sectio n

Yes

Google+

Flicker

No Likes o nly A uto sectio n

Other

StumbleUpon, Google + Fo r likes o nly

Conclusions • The mobile space is becoming a key battleground for personal auto carriers o The

majority of Tier 1 carriers are “in the game” o Tier 2 carriers are clearly behind as a group

• Hype sometimes outweighs the actual performance/functionality among the Tier 1 Mobile offerings are a pre-requisite for the large, national writers; they can’t afford to be seen without a mobile offering o Not all carriers have addressed the full range of user interface, technical, and operational issues required to support a highly usable mobile experience o A few carriers have clearly separated from the pack o

• Expect ongoing/rapid changes in this capability Once underlying integration capabilities are built, additional features can be deployed o Some Tier 2/3 carriers will likely leapfrog the lagging Tier 1 carriers o

Questions?

Erik Mann, Director Paragon Insurance Advisory Services (201) 618-8663 emann@consultparagon.com

Copyright ÂŠ 2012 Paragon Solutions, Inc. The information contained herein is proprietary and may not be distributed without permission from Paragon - 17 -