Anthem’s Response Took Edge Off Breach Negatives

Posted May 26, 2015

Survey Both Before and After Massive Breach Showed Anthem Faced Reduced Brand Damage by Way It Handled Breach

  • Anthem and health plans, Blue Cross and Blue Shield took “a hit in the brand” when hackers made off with 79 million customer records. As a result of the breach, there have been some 100 lawsuits seeking class-action status. So saying the brand hasn’t suffered is akin to the old line, “Other than that, how did you enjoy the play Mrs. Lincoln?”
  • However, a recent survey by Los Angeles-based Wedbush Securities of 1,022 consumers via the Internet both before and after Anthem disclosed the data breach, found that “while the data breach had a net negative impact, there is still a core group willing to pay more for the brand.”
  • In a story on ibj.com, J.K. Wall details what the Wedbush Securities survey found. The following has been excerpted from the Wall piece and edited to fit our format. You may find Wall’s complete article by clicking on this link.

A Wedbush analyst’s assessment

[Sara James wrote, “Brand] awareness and preference will be key, in our opinion, as Anthem continues to grow in the consumer sector of public and private exchanges as well as Medicare.
An 8 percent drop after breach

Before the data breach 51 percent of consumers said Anthem Blue Cross Blue Shield was a better brand than other insurers and after the breach, that figure dropped to 45 percent.
A 2 percent increase

[The 8 percent drop] was offset a bit by a 2-percent increase from other consumers who previously did not view Anthem as better, but changed their mind after seeing how Anthem handled the attack.
What Anthem did

Anthem passively enrolled all its customers in a basic identity theft protection program after the attack. It also gave members the option to sign up for more extensive protection, at Anthem’s expense.
Weeks before mailing instructions to customers

Anthem did not learn of the breach until Jan. 27—even though hackers first gained access to its systems on Dec. 10. Anthem made the breach public one week after discovering it, but then took several more weeks before mailing instructions to consumers telling them how to sign up for the ID theft protection service.
3 percent fewer willing to pay more for Anthem

Before the breach, 24 percent of consumers were willing to pay more to have an Anthem plan. But after the breach, only 21 percent were.

Nearly 11 percent of customers decreased the amount extra they would be willing to pay to have an Anthem plan over another insurer, with the average reduction being about 5 percent.
Willing to pay more after breach? Did we read that right?

But 7 percent of consumers, who had not been willing to pay a premium for Anthem plans, are now willing to do so based on Anthem’s response to the attack.
Young, old and Obamacare help Anthem

Wedbush found more favorable reactions to Anthem from younger and older consumers than from those in between. On the Obamacare exchanges, where Anthem has sold policies covering 898,000 people, the data breach actually helped Anthem, instead of hurting it.
Any company and every company can be a hack victim

James wrote, “The willingness to pay for the Anthem brand actually increased after the breach. We believe this could reflect the awareness of the younger exchange population to the proliferation of data breaches following hacking attacks on many large corporations and the willingness to pay more for a service that addresses the breach quickly and effectively.”

ThreatMetrix

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