Few Agents Have Tapped The InternetsPotential

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Since the early days of the 1990s dot-com boom, online retailhas remained one of the few bright spots in the Internet business,with nearly 40 percent of Americans having made a purchase over theInternet so far.

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But in the world of insurance, most agents still have somecatching up to do before they can fully utilize their Web sites,some industry experts say.

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One such expert estimated that only about one-in-10 agentsoffers online servicessuch as getting certificates of insurance andauto identification cardsand that even fewer firms sell insurancethrough their Web sites.

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Some of those agencies cited a number of factors, including thelack of time, knowledge and resources, as to why they are notutilizing their Web sites more fully. But at the same time, thereare a number of agencies, particularly in specialized, nichemarkets, that are now successfully offering their productsonline.

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“Most agents do have Web sites, but many are justbrochure-wares,” commented Jeff Yates, executive director at theAgents Council for Technology, which is affiliated with theIndependent Insurance Agents and Brokers of America Inc. inAlexandria, Va.

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“Around 10 percent of agents offer customer services on theirWeb sites, with fewer agents offering products online. But I thinkthe number is growing,” Mr. Yates observed. He said an increasingnumber of agents now have client-oriented sites, with features likegetting certificates of insurance and auto identification cards.“Agents' Web sites are starting to have the functionality to allowclients to find out about policy information,” he added.

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Gary Savelli, president of Internet sales at Basic WestInsurance Agency Inc. in San Francisco, agreed that, for now, onlya few agencies have fully tapped into the Internet's potential.“Generally, I don't think agents are doing a good job of utilizingthe Web,” commented Mr. Savelli, who also works as an Internetconsultant for independent agents. “I do a lot of consulting, andprobably more than 90 percent of the agents I talk to don't reallyknow how to leverage the Internet,” he said.

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“Agencies are not utilizing the Web as much as they should. Thebiggest factor that I have seen is the lack of time and knowledge.They just don't have enough experience and they often don't knowwhat works and what doesn't.”

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Mr. Savelli argued that most agents are too busy to reach out togain new knowledge and have ended up just offering basic serviceson the Web. “That's what I have seen; agents are just focusing toenhance current customer service, because that's all they can dowith their current knowledge.”

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Furthermore, Web-based sales have not been “the big ramp-up” foragents that everybody thought they would be, according to ScottKerns, co-owner and vice president of BayRisk Insurance BrokersInc. in Alameda, Calif.

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To illustrate his point, Mr. Kerns noted the lack of interestfrom some customers in buying insurance from his Web site. He saidhis agency's site has a feature called “Virtual Producer,” which,in an agreement with SAFECO Corp., lets customers buy auto or lifeinsurance online at any time, day or night.

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“It's a link to SAFECO, but because it uses masking features, itdoesn't look like you are going to the SAFECO site. Customers arestill going through our Web site, and it has our firm's design andname. And we receive a reduced commission on those,” Mr. Kernsnoted. But so far, the response has been “really not very heavy,”he said.

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“We have been getting minimal response,” he commented. “We doget some people who buy insurance at, say, three o'clock on aSaturday night, but not very often.”

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On the service side, BayRisk's Web site offers several usefulfeatures, including interactive online forms for commercialinsurance, as well as for coverage for home, auto and boat.“Customers would fill out an ASP form and it comes to us by e-mail,and then we can respond to it. We also have a ratings system thatcan quote two or three different companies for auto and home,” Mr.Kerns explained.

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Mr. Kerns said what he's been finding is that the service is“really the reason why people are coming to our Web site. Weprovide an access for them to request certificates ofinsurance–they can also go onto links to some of the insurers andget identification cards for their auto. There are also ways tosubmit claims after-hours.”

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He also pointed out that his Web site makes a handy educationaltool, especially for workers compensation issues.

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“Out here in California, we have tremendous problems with theworkers compensation crisis,” Mr. Kerns said. “So we offer workerscomp-related information and articles on our Web site,” heexplained. “This is helpful, because even though all theinformation is out there, most insureds don't have a clue untilthey get hit with their renewals. And then they scream at us and myCSRs get beat up. I think it's a good way for us to educate ourcustomers.”

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Eric Bossuk, chief executive officer at Tri CountyInsurance-Calabasas, a full-service independent agency inCalabasas, Calif., also said his firm uses its Web site primarilyas a service tool.

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“Our Web site,” Mr. Bossuk explained, “is a tool for ourcustomers to communicate with us and for them to make changes intheir policies, as well as to request identification numbers andreport claims, and get information about insurance companies theyare insured with.”

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Mr. Bossuk said that while most agents still see the Web as justa service-oriented tool, some agentsespecially those offeringspecialized productshave enjoyed more successes in onlinesales.

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“I wish I had the timenot necessarily the money, but the timetodevelop a strategy utilizing the Web. There are opportunities outthere, but it's hard to allocate more time and resources,” henoted. “If we could allocate more resources, we would want to havea bigger online presence in sales process [and] be able to marketand write more business on the Internet.”

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In addition, Mr. Kerns from BayRisk observed that for manyagents, the Web is used more and more for business-to-businesstransactions with their insurance companies. “Insurance carriersare the ones still driving the boat. They are making us all go tothe Web-based platforms for all of our work now,” he explained,“and that's fine because that saves them a lot of money.”

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For example, Fireman's Fund Insurance Co., SAFECO Corp. andTravelers Property Casualty Corp. all require Mr. Kerns' agency todo online downloads everyday. “We go to their Web sites and wedownload policies to our agency software on a daily basis. And theyare shutting off our paper in a lot of cases. They will send me onecopy of the policy–they will send me the insureds' copy. They won'tsend my copy anymore,” he said.

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But while most agents have yet to venture into Web-based sales,there are some niche players who are successfully conductingbusiness on the Internet. One example is the Commack, N.Y.-basedIMT Services Corp., which operates InsureMyTrip.com. “We are thelargest aggregator of travel insurance on the Web,” explained JimGrace, president of the firm. “We offer 44 different travelinsurance plans from 13 different companies.”

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InsureMyTrip.com, launched in June 2000, also offers privatelabeling and co-branding of its site for more than 500 other travelsites around the world, Mr. Grace said. “It is the only site on theWeb that allows customers to compare travel insurance policies fromthe major providers in the industry.”

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He said premiums range from 4 percent to 7.5 percent of the tripcost for the package policy. On the travel medical side, they rangefrom $15, up to $2,500, depending on factors like age and the triplength.

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Haylor, Freyer & Coon, based in Syracuse, N.Y., is anotheragency that has been successfully tapping into the Internet. “Forsales of insurance products, we have a section on our Web sitecalled the 'college student section,'” said Cyndy Smith, vicepresident of technology at the firm.

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This online service, which works with a number of universitiesaround the country, was launched last year but already has about10,000 customers, Ms. Smith said. “So it's new to us, and we arestill learning some of the pros and cons. But it's a very niceproduct for us,” she added.

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She explained that her agency has a team of producers that dealdirectly with U.S. colleges. “They will go to colleges and get anapproval to market fire policies for students to cover theirpersonal propertycomputers, clothes, booksin their rooms orapartments,” she said.

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“We would get permission from the school to market this productto their students, and once we get that permission, we would get alist of the students from the school,” she explained. “We send outmarketing materials that say, 'In order to purchase this insurance,please come to our Web site.'”

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Ms. Smith pointed out that in many instances, their parents willhave separate coverage on their homeowners policies, but it isusually very limited. “So this provides them with an extra bit ofcoverage for their personal belongings. The most insurance you canbuy is $10,000 with a $50 deductible, and the price is $135. Youcan also buy the minimum insurance, which is $2,000, with a $100deductible, and the price is $50.”

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Ms. Smith also noted that her agency offers medical insuranceonline, underwritten through Blue Cross/Blue Shield. “For medicalinsurance, we also go to universities and get approved from them.The cost for health insurance is around $1,000 for a whole year foreach individual student, and about $500 for half a year.”

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The online insurance is renewed every year, and if students comeback to the agency's Web site to repurchase, they can type in theirold identification information. The Web site will present them withall of the information from the previous year, and “they can gothrough a very brief renewal process,” Ms. Smith explained.

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The only way students can purchase this insurance on the Website is to use their credit cards, and Haylor, Freyer & Coon'ssite has a built-in credit-card processing feature through VeriSignInc.

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“This process approves the credit card right on the Web, andonce the credit card is approved, we allow the student to downloadthe policy copy. The copy is created in a PDF file, and the studentcan print the policy directly from their local printer,” sheadded.

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“In the personal property program, we have 18 participatingschools, and the Web-based health program has four participatingschools. We are hoping to grow and get more schools to participatein our online programs.”

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Haylor, Freyer & Coon is a large independent agency, withsome 25,000 personal-lines clients and around 10,000commercial-lines clients, and it has been offering these insuranceprograms for many years, Ms. Smith said.

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“But by using the Web, students are essentially self-enrollingand self-administering their policies. We used to have all theapplications in our office with their checks or credit cardinformation on their enrollment forms, and we had to enter theinformation into a system,” she recalled.

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“We had to call the credit card companies to verify payments,and then we had to manually print out policies or confirmation ofcoverage, put them in the mail and send them out to students. Itwas a nightmarea paper nightmareto deal with that many students allat once.”


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 25, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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