How far are we from the day when a major carrier like State FarmInsurance changes its name to StateFarm.com? As a salesdistribution channel, that day is still some way off, undoubtedlymuch to the relief of the people on the business side. But ascustomers increasingly turn to the Web, its clear company siteshave become a powerful service distribution channel thathas become a major part of the insurers corporate identity.

I think its an important part of the puzzle, says Bob Reiner,director of enterprise Internet services for State Farm Insurance.Its certainly a different connecting point for the customer,especially for the next generation coming up. It may very well betheir first impression of you as a company.

Given that companies cant make a first impression the secondtime, the Internet is a critical component of a corporate businessplan and will grow in importance. As time progresses, says JamieBisker, director of research for insurance practices with theTowerGroup, a research and consulting firm located in Needham,Mass., the Web will become easier to use and will enable instantcommunication between businesses and consumers.

Key to the success of a site is its integration into theenterprise-wide architecture. There has to be synergy, both onlineand offline, within your company, says Reiner. You bettercoordinate your online brand with your offline efforts.

A Web site is a touchpoint for consumers and insurance carriers.A good Web site does three things, says Bisker. It provides a wayfor the company to communicate information to the consumer. Itallows the consumer to connect with the company. And it offersservice capabilities for both sides.

So where should insurers set their sights when it comes to theirsites? Gmez, Inc., is an Internet rating service and consultancyfor a variety of industries, including insurance. Three of itshighest-rated Web sites in terms of ease of use, customerconfidence, on-site resources, and relationship services are StateFarm Insurance, John Hancock Financial Services and ProgressiveInsurance.

Each of their Web sites provides the little things that makethem standouts in a world of tangled Web offeringsan agent locatorsystem or multi-lingual capabilities, for example. Youve got togive customers what they want, when they want it, Bisker says. Youhave to produce a site the way the customer wants to see it. Andquality counts. Whatever you promote on your Web site you better beable to provide, Bisker adds. It doesnt do you any good if it isonly available sometime.

Insurers and consultants agree there are at least five essentialareas to address in producing a topnotch insurance Web site: selfservice, connectivity, business, security, and informationfunctions.

Self Service

Imagine a representative of your company telling a customer todo it yourself. A decade ago that would have seemed outrageous.Today, if self service is not in an insurers business plan, thecompany is wasting money. The cost of facilitating routine customerservice can be prohibitively expensive, says Greg Davies, senioranalyst for financial services with Gmez. How expensive? Comparethese numbers: dealing with agents$30 per inquiry; dealing withcall centers$12 to $18 per inquiry; dealing with the Internet$1 to$2 per inquiry. Thats pretty much a no-brainer, Davies says.

State Farms Reiner believes that a company can cut expenses withself-help programs on the Web site, but you have to have theinfrastructure available to accept and store the data, and that canbe expensive. Such moves require a major commitment from thecarrier. In terms of the way this industry usually moves, weve gonepretty quickly, Reiner says. It takes a tremendous amount ofsupport from upper management, though.

John Hancock, on the other hand, doesnt allow its life insurancecustomers to make many policy changes online. We give them theability to check the value of their investments, says Wendy Benson,second vice president of e-business and retail partnership. Shesays the goal of John Hancock is to make the Web experience easierand more convenient for the customer.

We have the benefit of a very strong brand, she says. Having afull product suite [available to customers] is important as well,whether they are buying or just gathering information.

Claims processing will be the long-term beneficiary of selfservice. Starting the claims process is easy to do online, notesReiner, but real-time claims status is much more complicatedbecause there are multiple businesses and customers involved. Its alittle more complicated than someones accounts, he says.

State Farm is getting more initial inquiries about claims, whichcan speed up the process. We are getting quite a few of thefender-bender type claims online, he says. Those can be filed atthe [insureds] leisure. The carrier is not getting many catastropheclaims online because customers still prefer to talk to an agent ora claims rep for those types of claims.

Youll have people who want to do things on their own like set uptheir checking accounts and do online bill payment as well as maketransactions with their policies online, Reiner adds. We think weneed to take a synergistic approach to this in the marketplace andmeet our customers needs in those arenas.

The first thing a carrier should do, according to Bisker, isreview its business cases and decide exactly what it wants toaccomplish per the business strategy before leaping headlong intotechnology. You have to make your company easy to do business with,he says, adding that if customers struggle to navigate your Website, they arent likely to come back. Capabilities users willappreciate are help tools that answer anticipated questions.Another piece of advice: A carrier should test self-servicefunctionality within its own office first, says Bisker, and thenextend it to agents through an extranet before offering it tocustomers.

The Gmez report, Policyholder Self Service, substantiates thatview. Gmez surveyed Web site users for personal auto policies andfound that while only 26.8 percent of insured general Web usershave visited their carriers or agents Web site, nearly half of themhave attempted to use the Internet to access information on theirautomobile policy or perform customer service tasks. A Web sitemust be easily navigable, Davies says, because over half of thosewho were unsuccessful at performing self service say they areunlikely to try again, while successful self service will likelydraw people back (74.7 percent).

Carriers are focusing on self service to fulfill a range ofcustomer needs from fully online endorsement requests to the basice-mail queries.

One concern for carriers is that agents may resist or notappreciate deflecting all those calls to self service. These pointsof contact might be the only time agents will have a chance to talkto their customers, which is also an opportunity to cross promoteother products.

Another issue is awareness. If a company offers self-servicefunctionality, it needs to inform its customers of the process.Most customers dont even know their insurer offers online selfservice, and those who do perform such functions often discover thefeature on their own, according to Davies. Communication is vital,because nearly 25 percent of users surveyed by Gmez believe iteasier to phone, fax, or visit an agent to accomplish a task thando it on their own online. The Web sites may be partly to blame forthis. Navigating some sites, particularly those with help toolsavailable, is easier than others.

Wheres Waldo? (Or Whatever Your Agents NameIs.)

Most CIOs would prefer to stay out of the debate over the needfor agents. But even if your Web site has the capability tounderwrite and issue a policy, most of a carriers sales comethrough agents. Therefore, Web sites need to offer customers aquick and easy way to pursue the human connection.

Davies says the agent-Internet relationship is no love affair.The word Internet is still a bad word for many insurance agents, heexplains. Their thought process is that the Internet is one stepcloser to eliminating them from the process.

State Farms approach is that there are always going to be somepeople who are going to feel a real value in establishing arelationship with a State Farm agent. That will always be the coreof our business, Reiner says. But we also need to be available byphone and Internet on a 24/7 basis.

While agent locators are useful, they need to facilitate more ofa connection between the customer and an agent than merely offeringa simple address or phone number. The Hartford Financial Servicesrecently developed a system with InfoNow that enables customers tocontact the agents immediately and allows the carrier to keep trackof the leads (see Case in Point, p. 15).

Were proud of the functionality on our Web site that helps drivebusiness to them, says Toby Alfred, Internet site manager forProgressive, who believes her company is bridging the gap betweenagents and the companys Web presence. When consumers visitProgressive.com to get a quote, theyre given the contactinformationincluding name, address, e-mail address, and a Web sitelinkfor up to five nearby independent agents.

And consumers want insurance agents, says Alfred. The fact is,many consumers still prefer speaking to someone personally beforethey purchase, she notes. We think there will always be a demandfor this.

But Progressive also knows that many of its customers can dojust fine without an agent. We want to provide an option for thoseconsumers who prefer an alternative: The night owl who wants toshop at 3:00 in the morning. Or those folks who just want a quickand easy way to check out coverage options and pricing on theirown.

While The Hartford developed its system with the help of avendor, State Farm was able to build its own locator system on itsWeb site. We actually built [the agent locator] here and maintainit as well, Reiner says. We brought in some people to help us. Wehave the portal up and running so that when you register with StateFarm you have a portal site, and we have a way of having a dialoguewith you through that. It varies across the board. We use differentpartners for different applications.

Bisker says this and other functions are falling under theheading of Web services (see Evolution, Not Revolution, p. 22),noting, Web services are the logical next step for improving acorporate Web site.

Can I Quote You on This?

Developing a fast and accurate quote system is essential for acarriers Web site because many policies, such as term life andpersonal auto, have become commodities. That involves collectingdata from all over the country (depending on how many states acarrier is licensed in) and spitting it right back out in a matterof seconds.

Reiner says, I think getting integration into the back-endlegacythe big ironis always difficult with formatting the dataproperly and contextualizing the customer experience. Carriersrelied on agents to handle inquiries, and now the calls come fromanywhere. For so many years, the customers dealt with agents andclaims reps, and now more of the organization is dealing directlywith the customer through the Internet, he adds. Data has to bepresented in a certain manner, a certain focus, and a certain lookand feel. Its all very complex, and were lucky to have some reallygood people here who understand that.

Were piloting new functionality that allows consumers to get aProgressive quote right off the agents Web site, Alfred says. Theconsumers contact information is then sent to the agent in the formof sales leads.

The Internet has significantly affected the purchase habits ofAmerican consumers. One in five adult online users utilized theInternet the last time they were in a purchase mode for insuranceto support their decision, according to Gmez.

I think the tools are out there today, Reiner says. We built ourown in-house quoting function here in conjunction with one of ourstrategic partners. I think there is software available now andprograms available for the smaller businesses where they canreplicate some of the things that have been done by the biggerorganizations. Its a little simpler now than it was back in 1996 or1997 when we first got involved with these things.

Many people in the industry are surprised that onlineaggregators such as InsWeb are still in business, but Daviesbelieves the aggregators are giving customers what they wantquotes.People want rate quotes, and if you cant deliver them, they will gosomewhere else, he says. The competition for carriers comes fromthe carriers themselves, not the aggregators. They still offer analternative for customers, but the impact is less acute.

How Secure Are We?

With all the data being collected by insurers on theircustomers, keeping it private and secure is not only goodbusinessits the law. In terms of how Progressive approaches theissue, integrity is one of our companys core values, and securityis very important to us, Alfred says. We use state-of-the-artsecured socket layer (SSL) technology to ensure security of ourcustomers information. Beyond that, we protect our customersprivacy and how we handle and store the information.

Progressive wouldnt disclose its security measures, but Alfredsays, Considering the state of technology today and whats availableto companies to protect this information, I would say we are doingall we reasonably can to protect the security of our customers andour Web site.

State Farm uses cookies to facilitate site navigation and toprovide additional security. It also uses the most recent releaseof SSL technology utilizing encryption of up to 128 bits to ensurethe safety of the data transmitted to the Web site.

Reiner believes it is valuable to have your Web site checkedperiodically, for both content and security problems. Whats beenreally helpful to us is to have evaluations of our Web site done bya non-biased, third-party arbiter, he says. Its nice to have themcome in and give you an objective, critical analysis of your Website. We try to do that every year, and while sometimes itssurprising, sometimes its reinforcing. I recommend it on aconsistent basis.

Information

Fresh content can make the difference between an active Web siteand one that is waiting for someone to click on. Its an integratedeffort between the business and the systems area, Reiner says.These days, things are moving so fast and you have to be fluid,flexible, and able to adapt. Having outside partnerships andstrategic alliances helps you do that. Our systems departmentallows us to integrate, and thats not an easy thing to do in anorganization our size. Weve done it fairly effectively in a shortamount of time, which is also another shift in the paradigm becauseordinarily things dont move that quickly in an organization thissize, and we have moved fairly quickly.

One area of information that State Farm and some others haveworked on is communicating with the huge Spanish-speakingpopulation in this country by translating its Web site intoSpanish. It sounds simple enough, but State Farm found it wastechnically challenging, according to Reiner. There are differentdialects of Spanish spoken by the various Spanish-speaking peoplewho have emigrated to this country. For instance, Mexican-Americansin California or Texas speak a different dialect than immigrantsfrom Cuba or any of the island nations of the Caribbean.

We wanted to find a baseline Spanish translation that wouldsatisfy our Spanish-speaking customers without offending any ofthem, he says. It took several months to translate it because therewere some insurance terms that just dont translate well.

French will be the next language tackled, he says. State Farmdoes a lot of business in French-speaking areas of Canada, andReiner notes, the company felt it important to recognize what manybusinesses fail to acknowledge: Many people think of Canada as anextra state, but of course its not, Reiner says. Recognizing thosedifferences assists State Farm from a global perspective, as well.Future insurance dealings are less likely to be structured aroundone country or one state, and the need to think globally will be apriority, according to Reiner.

Progressive is also aware that English is a second language formany of its customers. Customers can search our Web site for agentswho provide special servicessuch as proficiency in a foreignlanguage, says Alfred.

Progressive believes its name is indicative of the way it doesbusiness. Our goal is to continually enhance the site to meet thegrowing demands of consumers, Alfred says. Weve been an innovatorin the insurance industry.

Whats It All About?

Change occurs quickly in business, but the speed of changebrought on by the Internet is staggering. You just cant blink ortake a nap or youll miss it, Reiner says. You always have to beskating to where you think the pucks going to be. Bisker adds, TheInternet is an important component now, and as time progresses, theWeb will become easier to use and enable instant communicationbetween customers and carriers.

So while the Internet may not have changed the way we dobusiness now, insurers agree were not done yet. Six years ago,insurance Web sites were almost primitive when compared withtodays, according to Reiner. In six more years the same thing couldhappen.