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May 14, 2015

How a massive data breach affected Anthem's brand

Daily Briefing

    Following a massive cyberattack, Anthem's brand suffered with consumers—but rebounded somewhat on the strength of its response, J.K. Wall reports for the Indianapolis Business Journal's "The Dose."

    In January, Anthem announced that hackers had accessed a database containing the personal information of about 80 million of its customers, former customers, and employees.

    A new survey by Wedbush Securities finds the cyberattack slightly harmed Anthem's reputation with consumers, but overall the company's image remains strong. The survey asked 1,022 consumers about their perception of various insurance providers before and after the disclosure of the attack.

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    According to Wedbush analyst Sara James, "while the data breach had a net negative impact, there is still a core group willing to pay more for the brand."

    Prior to the data breach, 51% of consumers said Anthem Blue Cross Blue Shield was a better brand than other insurers. That percentage dropped to 45% in the follow-up survey. But the decline would have been as high as eight percentage points, if not for a 2% increase from consumers who previously did not view Anthem more favorably than its competitors.

    According to Wall, Anthem's post-attack response was able to win some consumers over. Following the attack, the company enrolled its customers in basic identity theft protection. It also gave customers the option to enroll in more comprehensive protection free of charge.

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    According to the survey, Anthem could still face some long-term business repercussions from the attack. Prior to the disclosure of the data breach, 24% of consumers said they were willing to pay more for an Anthem plan, but that dropped to 21% in the follow-up survey.

    Among younger consumers who shop on the health insurance exchanges, the willingness to pay for an Anthem plan actually increased after the attack.

    "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," James wrote (Wall, Indianapolis Business Journal, 5/11).

    The takeaway: Following a massive data breach, consumers expressed a lower opinion about insurer Anthem, but data suggest that the strength of the company's response may have mitigated damage to the company's brand.

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