It would be a mistake for most carriers to discard agents in favor of direct sales through the Internet. Insurance retailing on the Internet, whether offered by carriers or "virtual agencies," has not been successful. (See "Sounding Line," August TD.) And in fact no consumer-focused Internet insurance business model-whether sales, auction, portal, lead-generation, consumer information, or comparative quoting-has had much impact; certainly nothing like the once-common predictions of entrepreneurs, analysts, and consultants.
If direct Internet selling doesn't make sense as a business strategy for agency carriers, what does? Does the Internet have a strategic business role to play? Where should carriers place their bets? The right answers may defy conventional wisdom.
Doing (Almost) Nothing
Sometimes the right thing to do is nothing at all. Carriers that resisted jumping into the Internet fray with ambitious and expensive e-commerce initiatives may have done the right thing. But should a carrier entirely ignore the Internet and proceed as if it did not exist? Probably not.
First, in some cases Internet-based e-mail has significant advantages over phone and fax. It's relatively inexpensive to deploy and can improve day-to-day communications with agents, insureds, adjusters, auditors, and other parties.
Second, every carrier should have some sort of presence on the Internet-if only as a "brochure" site. Agents (current or potential), consumers, suppliers, and other parties want basic information about carriers-for instance, their history, focus, financial condition, rating, and contact process.
Third, carriers that use private networks and PC-based in-agency software to extend their systems to agencies can likely save money and better satisfy their agents if they move to some sort of Internet/browser-based approach.
If Internet direct sales isn't a promising strategy, is there reason to do more than e-mail, a brochure site, and substituting browsers for green screens? How about providing online self-service to insureds?
Allstate introduced its consumer Web site more than a year ago. Using the site, insureds can provide themselves limited self-service or opt for call-center or agent help instead. All three channels share the same database and functionality, so the insured can move among the channels as desired and still have continuity of service. Safeco and a handful of other independent agent carriers are beginning to offer online self-service as well.
Should all carriers rush to equip their Web sites with consumer self-service functionality? Is this the wave of the future? If direct sales aren't the opportunity carriers once imagined, is direct online service where the smart money should go? For independent agency carriers, probably not.
To the extent that carrier service sites further disintermediate agents, they may well do more harm than good. Making the agent less important to the insured doesn't mean the insured's loyalty will flow to the carrier. More likely, the insured's loyalty will attach itself to another agent that appears to pay more attention-and that agent probably writes for another carrier.
There are practical issues relative to the proliferation of carrier self-service sites. Given that independent agents write with multiple carriers, it's likely that some or many of their customers will also have policies with multiple carriers. Is the insured supposed to remember which Web site to go to for a particular insurance purpose? Should the insured be responsible for managing ever more passwords, user interfaces, and workflow? Though on the surface carrier online consumer self-service appears to fill a need, ultimately it could create a service nightmare for the consumer-and more work for agents and carriers.
If it's too hard for consumers to figure out how to go to multiple carrier sites for service, maybe the solution is to have them come first to the agency site-which then has links to the carriers' self-service sites. Unfortunately, clicking through from the agent's site doesn't solve the problem. The consumer still has to know which carrier holds the particular policy, and then how to deal with that carrier's site.
If carrier-supplied insured self-service isn't a good investment, how about facilitating self-service out to the insured via the agency? Is this something carriers should invest in?
Agency-Based Self-Service
Agents are in a better position to offer satisfying self-service to their customers than carriers. Some agencies are already extending their agency management systems or surrogates systems out through their Web sites to customers who want self-service access.
The insured is assigned a user ID and password, comes to the agent's Web site, picks out the right item from a list of policies, is presented policy detail, and then can enter a request for a change. The insured doesn't have to remember which carrier insures his home or that there was a carrier change last year. The insured need only deal with one domain name, one password, and one user interface-the agent's-to handle all his insurance service needs year after year.
If agency-based self-service has a better chance of long-term success than a proliferation of carrier-based self-service Web sites, what should carriers do to facilitate it?
In the short run, perhaps, a carrier need not do anything at all. The agent is already providing customer service from its management system and should be able, with the help of its vendor or a third party, to provide self-service functionality to its customers.
Of the options reviewed thus far, it's obvious that not all independent-agent carriers need to do much about-or with-the Internet. But surely there must be some way carriers can take strategic advantage of the Internet. There is-but it's not by providing services directly to the insured; it's by providing Internet-based services to agents.
Carrier Self-Service for Agents
Carriers can benefit by substituting the Internet and browsers for private networks and PC-based software in agencies. Communication and support costs can be reduced. But what's more interesting is using the migration to a Web-based solution to significantly reengineer workflow.
As an example, an increasing number of carriers are deploying online services to their agents that reduce the number of steps and time required to quote, underwrite, sell, and bind a policy. In some cases, the improvements have been dramatic and well-received by agents-with a byproduct of better service to the insured.
Ultimately, the idea is to achieve a once-and-done environment-with the agent completing the entire sales or service process in one sitting. One could argue, with reason, that widespread implementation of once-and-done for agents through carrier Web sites could make a more substantial productivity improvement than carriers have realized through all their other automation investments combined.
While carrier Web site-based agency services can significantly help the carrier, the approach has some disadvantages for the independent agent. The agency staff must learn multiple carrier user interfaces, deal with multiple sets of passwords, and follow multiple workflows. And to avoid double entry, the agency management system must be automatically populated with the data the agency enters into the carrier system.
One can imagine a state of affairs in which the agent and the carrier each get what they want-the carrier a less expensive process, and the agent a single workflow across multiple carriers. One way to describe this environment is as multi-carrier, once-and-done.
Remote Services and the Real-Time World
Some carriers who are now deploying Internet-direct consumer sales and service and/or online services to agents see these efforts as stepping stones to a world in the process of materializing. The expectation is that carrier sites-and most ASP sites in general-will evolve into remote services, subservient to more primary agency systems. In this environment, agency systems will talk to carrier systems-in the background and invisible to the agency or consumer user. The multi-carrier problem will be eliminated by agencies using integration platforms that call remote services, but then imbed the data and functionality into a common interface and workflow. Real-time rating is the toe in the water of this new world.
Though conceptually promising, this remote-services world may be more difficult to implement than you imagine. And even if the remote services/integration platform concept turns out to be a trivial technology exercise (and it won't), social inertia will slow its general deployment.
If your company partners with agents, especially independent agents, do what you can to support them and their Web efforts. Don't worry about direct sales or direct service. Do worry about significantly simplifying processes-to a single step performed by the agent when possible. Do so on a proprietary, single-carrier basis first, if necessary, but with the intention of making the functionality available as a remote service as soon as there's an agency integration platform that can use it. Ask your agents and their vendors what they need to make it possible for the agents to provide online self-service to the insured-your common customer.
Or, if you choose, do nothing. It's actually a reasonable Internet strategy for now even if the 'change industry' wants to help you spend millions on Internet direct sales or service implementation-with little real return possible.
John Ashenhurst (johnashenhurst@soundingline.com) is editor of Sounding Line, a monthly newsletter covering insurance and the Internet. For more information see www.soundingline.com.
John Ashenhurst's company, Sound Internet Strategy, provides consulting, Web site evaluation, and seminar services to carriers and their trading partners. He can be reached at johnashenhurst@soundingline.com or (978) 318-1944.
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