Nationwide’s Casey Kempton has a vision to bring positive vibes back to engagements between personal lines insurers and their customers—and it starts with understanding the “mental models” that homeowners and drivers reference to understand insurance.

Kempton, who has been president of Nationwide Personal Lines for just about a year, has a research background in cognitive anthropology—in her words, “the understanding of culture as it exists in the minds.”

For the last two decades, she has been observing the insurance customer culture—and the mental models they rely on—like “switch and save.” Those shortcuts to understanding personal lines insurance are ripe for change, she believes.

“I think the industry, in general, has an opportunity to bring the value of the protection that we provide on multiple dimensions [into] a much more positive light than the way that we, collectively, have engaged customers previously,” she told Carrier Management recently.

Kempton was responding to a question about why she chose to accept a position in personal lines, after most recently leading commercial lines digital business initiatives at Chubb, at a time when both auto and homeowners insurers were dealing with their biggest challenges in decades. In short, there’s a lot of opportunity to put an understanding of mental models to work in personal lines, she suggested.

“I think the industry, in general, has an opportunity to bring the value of the protection that we provide on multiple dimensions [into] a much more positive light than the way that we, collectively, have engaged customers previously.

Casey Kempton, Nationwide

“I’m not suggesting that customers see it negatively, but you do hear sometimes, ‘I’m not sure if the insurance company is nickel and diming me’—just in general, not any company. Or ‘I’m not sure at the moment of claim that I really have confidence in what’s going to happen because I don’t 100 percent understand what I’m covered [for].'”

“Our product [is] a legal contract,” which independent agents and captive agents need to translate for customers. It’s not something customers have to think about every day. “So, at a moment of loss, there’s a little bit of panic that comes,” she said, giving just one example of where she sees opportunity for carriers like Nationwide “to really just lean into the market.”

In particular, Kempton used the phrase “lean in” to refer to ways in which personal lines insurers can connect with consumers to build “trust, confidence and control” in their interactions.

How We Got Here

Before sharing some specific ideas, Kempton offered a view of recent history.

The advent of the Internet, competitive price shopping and data to enable pricing sophistication resulted in “the 35-year commoditization of the personal lines industry,” which first occurred largely in auto. With that commoditization, “we eroded some of the more local value of how auto insurance connects with consumers,” she said, referring to the industry overall and noting Nationwide’s long-time history of service through local agents.

“The advent of brand-driven direct writers somewhat changed customers’ perception,” resulting in a view of the industry that is focused on the idea that “this is a product from which I can realize discounts, and that is motivating me to switch and seek a better deal.”

“We’re almost in that mindset of devaluing the value of the insurance company in that commoditized way,” she said.

Homeowners insurance is less commoditized—agents offer guidance on the appetite for risk, the need for umbrella policies, etc.—but auto and homeowners ultimately “got roped in together,” she said.

The mental model “creates an expectation of the insurance company [that will] give me the most for as little premium” as possible. “That’s a tenuous equation when the world does change,” she said, referring to recent challenges of weather volatility and inflationary pressures that have prompted insurers across the industry to raise homeowners and auto insurance rates.

In the customers’ minds, “‘They’re raising rates. That’s bad.’ There isn’t an understanding that the total cost to insure everything has risen at a rate and perils have changed.”

Experiences Matter

Kempton believes insurers can begin the process of trust-building by helping customers appreciate the fundamentals of protection in non-catastrophe, non-weather potential loss situations. That involves bringing them solutions that engage them in mitigating damage from “core exposures,” rather than educating them about the cost burdens of insurers.

As a consumer, “you can see your property insurance as somewhat of a home maintenance policy—’I can let things slide, and it’s OK because the insurance company will pay for it if I have a loss.’ Or you can recognize, as a homeowner, where your responsibility starts and stops on the fundamental conditions of your home…”

“Then your base premium relative to projected losses is lower. You have the insurance and it’s affordable for the big [catastrophic] losses,” she said, proposing this shift in mental model as a step toward creating a better understanding of the value of insurance.

In Kempton’s view, “consumer perception can’t be educated. It has to be experienced. So, when you show up as a carrier and you’re endeavoring to do more than just provide the financial indemnity and the excellence of service—[when] you’re [also] trying to engage in a way that, through the agent, you’re partnering with that insured to protect what matters to them most in a very real and tangible way—[then] you’re delivering on the proof points that will change perception based on lived experience more than anything I could say,” she said.

Turning her attention to the proof points, she highlighted the perils of non-weather water damage and electrical power surges as two over which customers can exert greater control—with the help of smart home devices.

Discussing the first, Kempton noted that if there is equipment in your home that connects to your plumbing in some way, or your water heater has something faulty about it, then any resulting water loss can damage floors, basements and contents—”things that people care about and love.”

“There is an emotional connection to that” loss, she said, noting that LeakBot, a Nationwide partner, offers a device that homeowners can self-install to measure water flow and detect leaks.

Customers who elect to install the device, at no charge, can get a 10 percent discount on their homeowners premium, according to online marketing materials.

“It’s one thing to send a consumer an alert that says, ‘Hey, there’s a problem,'” Kempton continued. “It’s another thing to immediately connect you with an expert who understands the nature and the possibilities around your problem and can send someone to your home, or remediate it over the phone,” she said, referring to the fact that LeakBot doesn’t just notify a homeowner when it detects a leak (via the LeakBot mobile app, by SMS and email), but also provides access to a team of LeakBot engineers to find and fix the problem.

According to Nationwide, there is usually no charge for the repair service—and technicians will also use patented leak detection equipment to confirm the property is leak free before they leave. In the event that an individual repair part costs over $250, the homeowner will cover the excess amount for the part purchased.

“What you’ve done there is you’ve taken away the inconvenience,” Kempton said. “I know there’s a problem; I don’t know how severe it is. Do I have time for this?” the customer thinks. “Let us take this on for you now,” is the message from the insurer through its vendor partnership.

“That’s the type of vendor solution that we’re looking for—partners who can deliver that service. And then that is the value,” she said, referring to heartwarming testimonials that Nationwide receives on a daily basis. “We’re actually impacting people’s lives in a very positive way,” she said, going on to describe a second partnership with Whisker Labs, developer of Ting, a sensor and service that monitors a home’s electrical system to help detect fire hazards before they become dangerous.

Kempton noted that the Ting sensor device, available at no charge to Nationwide policyholders, measures the electrical current throughout a home to detect any anomalies, and also measures and monitors the electricity coming into the street where a home is located to detect whether there’s any surge there. “It’s like a neural network on top of the power grid across the U.S.,” she said, noting that Ting will call the electrical company on a homeowner’s behalf.

“There’s a problem with the power line coming into your house. How would a homeowner ever know that?” Kempton said, noting that this is another way of giving consumers a way to prevent a loss they never had control over before.

If Ting detects a potential fire hazard within the home of a Nationwide customer who has installed the Ting device, then that customer will receive an alert (an app notification, or a personal text, email or phone call from a Ting Fire Safety Engineer, depending on their preference), and will walk the homeowner through details on the hazard and a plan to mitigate it. If needed, a Ting-authorized contractor will be dispatched (in full coordination with the homeowner) to repair the problem. Ting will cover up to $1,000 of the labor, which usually will cover all costs.

“We’re showing up as a solution provider, as a partner—not in mitigating loss from a carrier perspective on the financial side but as a value to consumers,” she said, noting that Nationwide has “received nothing but emotional ‘thank yous’ for those services.”

“I believe that’s where the confidence starts, as well as building toward trust.”

The insurer is “giving the customers the control. It is not an information dump, education approach. It’s a lived experience. ‘I get it. I can see how this connects,'” she said, expressing the customer view.

In Auto, Too

Kempton puts telematics in the same experiential bucket of tools that can support the mental model of greater control for insurance customers, “notwithstanding all the objections around data privacy.”

“What is happening to my data? That all exists and it is real. But when you give drivers real-time information about how distracted they were on a trip, or what are some of their [driving] behaviors that merit improvement—if you take that model and you put it against young drivers who are just learning—then not only are we now addressing insurance premiums and potential loss and credit for good driving, we’re also making better drivers. [That’s] a major concern of a lot of parents of youthful drivers. And that’s where the opportunity is,” she said.

Related articles: Nationwide Insurance: Using a Decade of Learnings to Create Next-Generation Telematics Solutions; J.D. Power UBI Scores: Nationwide is Top UBI Insurer

Kempton continued: “An auto insurance rating can be a little bit of a black box. Nobody quite understands the inputs and outputs, [or] where they personally impact that—except obviously if I have an accident. That shows up in a negative way… But how can I impact what I’m charged? I’m a good driver. I don’t want to be charged the same as a bad driver.”

As for the data privacy issues, Kempton agreed with the hypothesis offered by Carrier Management that more positive experiences with smart home devices—making customers feel more in control of minimizing their risks—might help to ease concerns about telematics.

“More than half of Americans have an Alexa-type device in their home, she noted. That’s a starting point. She’s always listening in some way. And so, we are finding an intersection of adoption of smart home and telematics. They go together.”

“Where there’s an openness to that already, then reaching those customers and making sure they know that Nationwide has these benefits available, and that control, is part of just the first challenge. There are people who are already oriented and wired and are seeking that control.”

“How we then change the mass mindset—that is still the work in front of us,” she said.

She concluded: “I just go back to that lived experience with how we will do it, and I’m sure some others will. [And] over time, we’ll start to change that perception. But that isn’t an overnight,” she said, suggesting that insurers are prepared to take on the long-term challenge.

The Mutual Advantage

In Kempton’s view, Nationwide is particularly well positioned for long-term thinking.

Responding to a question about why she decided to take an executive position at Nationwide after prior stints at The Hartford, ACE and Chubb serving U.S. and international customers, Kempton said: “We’re a mutual company and not beholden to—I’ll call them the Wall Street gymnastics.”

Explaining that the choice of words wasn’t meant in a pejorative way, she said, “I’ve always worked for public companies and was looking in my career, and [in] my next step, to have the opportunity to really laser in on the member experience and how important that is—and have the opportunity to build longer-term strategies which mutual companies generally can focus on.”

In addition, she believes that “Nationwide is in a real position of strength” operationally—”whether that’s the technology in the background or the infrastructure that we sit on.”

“That’s distinctive. A lot of insurance companies are still going through a modernization journey,” she said, noting that Nationwide’s advanced position was also a draw for her.