Insurers Return to Text Messages for Customer Interaction

Smartphone apps are hot in insurance and elsewhere. But simple text messaging is still one of the most popular uses of mobile phones. Young adults are sending an average of 109.5 text messages per day, Time reported in 2011.

Some insurance companies are trying to insert themselves into that flow and take advantage of consumers' proclivity for texting. Customers of Direct Insurance "overindex" into mobile, says company chief actuary Brian Hanrahan. The company recently introduced a way for customers to pay their insurance premiums by text, as part of an overall push to be more "omnichannel" in its customer interaction strategy. (Direct's new kiosks make it possible to buy insurance or pay a bill).

"Our research shows that about 55% of our customers have smartphones, and they can pay through our app — but this gives an avenue for the other 45% to pay through mobile," Hanrahan says.

The integration between the customer's phone, bank, and Direct is handled by a third party, similar to CURE Insurance's pay-by-text initiative that is powered by Western Union. Text message payments make it easy for customers to remember when their bill is due, adds Direct's operations solutions manager Rick Williams.

"This is actually the first time we've ventured into the text world," Williams says. "We feel it can be more convenient than even a recurring EFT (electronic funds transfer), especially for our customers who might be living paycheck to paycheck."

In health insurance, despite the many problems with the rollout of the insurance exchanges, carriers are still working to get uninsured or underinsured people enrolled. Blue Cross Blue Shield of Michigan is using text messaging to start the conversation about health insurance subsidies.

Interested Michiganders can text "4Subsidy" to 222-752, provide their ZIP code, age, income and number of dependents, and participate in a back-and-forth conversation detailing their eligibility.

"Determining your subsidy eligibility and amount is a first step in choosing health coverage under the ACA, and Blue Cross is pleased to offer this service to help people know what subsidy they may be eligible to receive," said Terry Burke, VP for individual business at the insurer, in a statement.

[Check out these other ways health insurers are engaging the public to explain reform]

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio