How Does a Mobile Insurance Company Overcome Profitability Obstacles in Key Areas of Business, Specifically in Force-Placed Products?

A mobile insurance company, which has been providing coverage for mobile devices for decades, found itself trapped in its net-operating force-placed products in 2013. The company's executives turned to Research Nester for assistance in developing strategies for incorporating network security.

mobile-insurance

An overview:

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The company has been providing insurance to its customers for approximately 131 years. Its clientele included the top mobile companies in the United States.

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However, in 2013, it experienced a significant 21% drop in net operating earnings for the first half of 2013 compared to the same period a year earlier as consumer spending affected sales of extended-service contracts and unemployment amplified credit-insurance losses. As a result, its reputation and dependability were severely damaged.

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Even though the company did everything within and outside its control to limit the extent of the damage, there were serious consequences that impacted its market position.

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The company's administrators contacted Research Nester to develop a network security strategy that would protect sensitive data and shield its databases from security threats to avoid a repeat of this unfortunate incident.

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The Story

The company, which is a well-known mobile insurance platform with a strong market position, unexpectedly saw a drop of 21% in net operating earnings in the first half of 2013. As compared to the same period the previous year, consumer spending impacted extended-service contract sales, and unemployment exacerbated credit-insurance losses. However, the ratings agency also states that a company "continues to introduce innovative products in markets that are less susceptible to economic conditions, such as the mobile phone market," citing the company's recently announced program with a German-based mobile phone network company, which will provide handset protection and more frequent upgrade opportunities to U.S. customers. The ratings agency says the specialty insurer "faces economic and regulatory pressures in several businesses along with an expected mix shift away from its higher-margin lender-placed (also known as force-placed) products," which is why the company's ratings were dropped in the Unrated Issuer Report (UIR). The company's force-placed product will be impacted by a longer-term decline in demand as the housing market improves as well as by regulatory scrutiny. The business consulted Research Nester analysts to help it implement a nearly full-proof network security strategy to prevent similar incidents in the future.

A customized solution was provided by Research Nester in the form of a market study on Europe mobile insurance. It offered a thorough analysis of cutting-edge insurance technological solutions for raising insurance ratings in businesses. To support a robust and modern mobile insurance market, RNPL consultants also developed a framework of mobile insurance measures.

Our Solution:

The primary issue with the company’s digital infrastructure was that it had not been updated and lacked patching for a few vulnerabilities. Hence, it became an easy target for lender-paced product insurance. Research Nester consultants suggested revamping the company’s security infrastructure practices in the following ways-

  • Investing in high-quality lender-placed products
  • Implementing multi-factor authentication
  • Improving data retention practices and implementing strict access controls to safeguard mobile information
  • Conducting regular rating systems
  • Explaining the benefits of mobile insurance, which protects against a variety of risks such as damage, theft, and malfunction, among others
  • Working closely with regulatory organizations to update their privacy policy guidelines and ensure adherence to mobile protection laws

In addition, RNPL analysts also suggested the company could engage in partnerships with or employ renowned smartphone market firms to conduct independent mobile insurance audits. This way, the company could obtain certifications and demonstrate its commitment to increasing the rate of lender-placed products. This would help the company win back the loyalty of its customers.

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Results

The mobile insurance platform had a strong market position as of 2017. The profits in the same year were valued at approximately USD 465 million. The company had incurred a loss of 21% that included the fine, legal action from clients, and the loss of existing customers by the end of December 2021. Apart from the financial drain, the company had also damaged its reputation and reliability. The market share of the company in the U.S. stood at 35% at the beginning of 2021, and by the year’s end, it was a meager 8%. At this point, Research Nester was asked to use its experience and expertise in the field to bring the company back on track. By incorporating the strategies as advised by Research Nester consultants, there was a gradual improvement in customer acquisition. Since the company showed ingenuity in its efforts to prioritize its lender-placed product rate, its clients became ready to give it a second chance. By the end of 2022, the company’s profits had reached USD 5200 million, with a market share of 32%. In the first quarter of 2023, the market share of the company was 38% and is continuing to grow.

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Swara Keni

Head- Global Business Development

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