The need for automobile insurance on all vehicles is not only a necessity but also the law. There are numerous drivers on the roads today that are underinsured or have no insurance to begin with. These facts can be very expensive in the event that a driver is in an automobile accident without insurance. What can be done to ensure that the problem of driving without insurance is rectified or at a minimal? How will the public benefit from investing in the solution to this problem? These are the type of questions reviewed when the Blue Ocean Strategy was chosen in the development of the Driver’s Insurance License (DIL). With the Blue Ocean Strategy process, the following subjects covered in this paper include the opportunity to ensure insurance on the driver of a vehicle and the success of the product. The impact on the result of this product, the customer value created by this product, the implementation process, and the measurement of impact that this product will have on society by using the Blue Ocean Strategy considers these. Sometimes it is necessary to reward smart behavior even when that behavior is the law anyway.
Everyone needs a little incentive to do the right thing from time to time and what better way to do that than make it mandatory in order to drive certain vehicles and reward them with a tax credit for every year that they are properly insured. That was the basis of the development of the Driver’s Insurance License. The concept of the Driver’s Insurance License is to ensure that properly insured drivers with the minimum requirements of the registered State the license is in receive added benefits and discounts from the State and Government. The Blue Ocean Strategy offered several variables in the product development, production, marketing, and distribution of the Driver’s Insurance License. What would meet the needs of the consumer, the state laws, and the insurance industry? How to address this dilemma or obstacle and meet the needs of each party is main concern needs addressing?
Research and development determined after much brainstorming and many hours conducting research of various products and/or solutions, that was already on the market to achieve this endeavor or one that came close to an answer emerged on the Louisiana Department of Insurance website. Act 824 approved and taken into immediate effect on August 1, 2012, by Louisiana Legislation which relative to proof of insurance; to allow for the usage of mobile electronic devices as a method of providing proof of insurance (Representatives Cromer And James, 2012), effectively allowing drivers to display electronic proof of insurance on cell phones and tablets. According to Idaho Department of Insurance Legislation website Idaho Senate came up with a Bill that would allow for the use of electronic proof of automobile insurance effective July 1, 2012, “Senate Bill 1319 – Amends Idaho Code § 49-1232 to expressly allow an individual to produce proof of automobile insurance in an electronic format in lieu of a paper certificate”.
In order to utilize the Blue Ocean Strategy effectively to create an uncontested market space by collaborating with various state departments of transportation and insurance companies that would allow for an electronic stripe or bar embedded on the back of the State Driver’s License (Kim and Mauborgne, 2005). This partnership would bring in additional revenue to the State and the Insurance Companies would receive greater volumes of consumers. This idea would not stop with the State and Insurance Companies but would also provide incentive tax credits to consumers’ that elect to pay the additional nominal fee for this added feature to their driver’s license. Car companies that put card readers into the dashboard on their vehicles would also receive a tax credit and deductions for each vehicle sold.
The concept seemed overwhelming to come to fruition with many things threating to derail the project before it even left the ground. The first obstacle seemed to come from funding and legislature. Where would the money come from and how much tax credits would a dealer, consumer, or insurance company get and for how long? Various marketing research on biometric fingerprint usage, the smart card readers, pass codes, and smart cars determined the funding for this project.
Once the data reflected on the cost to find and fix the flaws that other companies experienced with these items on a stand-alone basis it became apparent the amount of financing needed to complete this venture. When conducting a research report there are 2 approaches that can be used when gathering primary information. The quantitative research approach involves gathering information from a large quantity of people and composing this into a research. The result deduced from the sample is used as a means to portray the general behavior and status of the entire population of that specific area. (Studymode.com, 2011)
This took a great amount of research to determine a fair tax credit. The Driver’s Insurance License tax credit is similar to the likes of an energy conservation credit or the smart car tax credit given by the government. Those states that have state income tax would offer a deduction for those participating in the Driver’s Insurance License venture. This is allowing for a substantial savings across the broad for all of those that are involved as long as that feature remains active to their Driver’s License.
The next speed bump in the design of the automotive department is the reader aspect in the dashboard. It is imperative to have a failsafe system in the design that would allow the consumer to start their car even in the event that their DIL is lost or stolen. In the event that their card is lost or stolen, the use for a four-digit pin code and personal thump reader would activate the vehicle. Car makers needed assurance that extra money put into the vehicle to make it enable to start without the proper documentation or passcodes were nominal at best.
It was determined that the Biometric thump print reader would cost $85 – $100 to manufacture and the DIL reader would cost around $10 to manufacture. That would put the cost of these two items between $95 -$110 to build and would retail in the vehicles for $300 for the standard DIL reader and $500 for the fail-safe version that includes the thumb reader. This option would require Wi-Fi capability to transmit insurance coverage via the DIL card to the internal reader that allows for real time coverage verification. Participating insurance companies will provide this service for a nominal fee of $5-$10 a month depending on coverage of the vehicle.
To determine the value that consumer placed on the DIL a small populous participated in a six-month trail to see if they felt it were worth the money. The results from the trail showed 85% of the consumers determined it was worth the extra money to get the device installed in their vehicles and to pay for the upgrade from the regular State Driver’s License to the State Driver’s Insurance License. They concluded that the deductions and credits would offset the cost of the program and eventual save them money in the long run after the course of two years. These commits given by phone, in person, via electronic surveys and mail in surveys also pointed out a negative that the company had not thought of.
The other 15% of the populace stated that it was a good idea but was not feasible to those consumers not in the market for a new car purchase and therefore could not support the concept being only in new vehicles. This additional commit lead the company back to the drawing board to offer an economical way to provide the service to everyone and the concept of a $400 dollar rebate available to consumers interested in converting their existing vehicle over to enable usage to the DIL and Biometric failsafe device. This rebate would make the cost of transitioning the car to the upgrade a $600 remaining fee that includes the cost of labor. When those same 15% of the populous that answered negatively were then again approached with this new addition, the response increased ten folds in favor of the services.
The advertisement for the DIL encompasses the Internet, billboards, television, radio, fliers, car dealership specials, insurance specials, and coupons. The DIL not only gives consumers more money in their pockets but more jobs in the economy with the new addition of manufacturing needs to make this project work. Marmolejo’s quote, “Creativity and innovation begin with the spark of an idea,” is used as the slogan of the campaign and advertisement for the DIL.
Yes, it is evident that the need for automobile insurance on all vehicles is not only a necessity but also the law. Now with this spark of innovation the number of drivers on the roads today are better apt to participate in attaining insurance to begin with. These facts can be very largely attributed to the credits, deductions, and rebates offered by automobile dealerships, insurance companies and the state and government income taxes.
The impact on the result of this product, the customer value created by this product, the implementation process, and the measurement of impact that this product will have on society by using the Blue Ocean Strategy demonstrates the advantages of participating in this program. Not only that but also makes it hard for thieves to by-pass the fail-safe feature needed to drive any vehicle equipped with these services. The spark started small but is now a full fledge roaring fire and no longer a small waning kindling.
Cromer & James (2012). House Bill No 1130. Act No 824. Retrieved December 2, 2012 from http://www.legis.state.la.us/billdata/streamdocument.asp?did=812485 Insurance Legislation Summary (2012). Idaho Department of Insurance. Retrieved December 2, 2012 from http://www.doi.idaho.gov/legislation/2012Legislation.aspx Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston, Mass: Harvard Business School Press. Marketing Research in Practice (2011). StudyMode.com. Retrieved November 18, 2012 from http;//www.studymode.com/essays/Marketing-Research-In-Practice-696699.html Marmolejo, N (2004). Creativity and innovation begin with the spark of an idea. Retrieved from http://www.leader-values.com/article.php?=200