Insurance Web Sites Trail CompetitionIn Banking, Securities, New Study Finds
When it comes to attracting customers in the online marketplace, the insurance industry is getting its butt kicked by banks and other marketers of insurance products, according to the "2001 eInsurance Study" from management consultant Booz Allen & Hamilton.
"Despite explosive growth in traffic, many insurance Internet sites fail to measure up to competing bank and brokerage sites," said New York-based Booz Allen. "Insurers need to recognize this and deal with it at a faster pace," added Gil Irwin, vice president and head of the e-business insurance practice at the firm.
Although visitors to insurance sites increased by an impressive 1,150 percent between 1999 and 2000, "insurance companies still attract far fewer visitors to their sites than other financial institutions," said Booz Allen. The study noted that insurance Web sites–including individual company sites and aggregator sites–dont draw as many customers or offer the same extensive product mix or suite of services found at their non-insurance competitors.
Booz Allen said its study analyzes Internet usage data from Neilsen/NetRatings to determine how consumers use insurance sites, comparing them against each other and against bank and brokerage sites. The consultant added that it surveyed both property-casualty, and life and annuity providers along with "top financial institutions and financial intermediaries." More than 200 Web sites belonging to carriers, banks, brokerages and online intermediaries were reviewed.
One reason that insurance Web sites tend to be visited less frequently than other financial sites, said Mr. Irwin, is that insurance sites generally offer fewer products. "Its not as if [insurers] have fewer customers," he explained, "but people use the Web for immediate transactions and there are not as many transactions for an insurance product. Maybe youll go online to pay a quarterly premium or once in awhile to check the status of a claim."
With an online broker or bank, however, activity could be generated almost daily, noted Mr. Irwin, who suggested that "what insurers need to do is make their sites richer."
According to the study, the top 10 insurance sites were visited by five million users in April 2000, compared to 18.2 million visitors to the top 10 bank sites in the same month, and 11.5 million visitors to the top 10 brokerage sites.
In addition, the study noted, consumers spent less time at insurance sites (under 13 minutes per month), as compared with bank sites (22 minutes) and brokerage sites (35 minutes).
The study also points out that while some insurers have plans to add Web site functionality–capabilities such as problem resolution, claims tracking, self-administration of policies, online account viewing, and bill payment–many have not yet done so. "For instance, 86 percent of insurance customers want to self-administer their accounts, but only 25 percent of insurers allow that, although two-thirds say they plan to implement it," said Booz Allen.
The consultant added that time to respond to e-mail inquiries also needs to be improved among insurers.
Mr. Irwin conceded, however, that encouraging online insurance sales activity among carriers might result in strained relationships with agents, on whom many carriers depend for the majority of their business. In that sense, he agreed, insurers might benefit by keeping their Web sites relatively quiet.
On the other hand, Mr. Irwin said that insurers need to "create a multi-channel strategy and integrate the channels–agent, Web, mail and phone–and they have to make it seamless."
Mr. Irwin believes that carriers need to be aware of what their customers are doing in terms of Internet shopping or other insurance activities. "The goal is to integrate all the channels seamlessly and let each customer decide how he or she wants to interact [with the insurer]," he observed. He called such a strategy "remarkably powerful," and asserted that it will help insurers to retain customers.
In terms of keeping the agent force happy, Mr. Irwin said that some insurers are paying a reduced commission on Internet-generated sales to agents who are not involved in the Web transaction. The agents then get the added bonus of maintaining a relationship with the customer to cultivate sales of other products or future sales, he explained.
The Booz Allen study said the online insurance market is expected to account for 1.5 percent of the total net premiums written by 2005–not significantly different from what it is today, Mr. Irwin said.
Property-casualty products are expected to drive online insurance growth, the study notes, representing 88 percent of the online market by 2005. The remaining products will be term life and simple annuity products, Mr. Irwin added.
Mr. Irwin also believes that insurers need to claim prime "shelf space" on high-visibility Web sites run by banks, brokerages and aggregators. They can do this, he said, by entering into alliances with such sites.
Overall, said Mr. Irwin, while "some carriers have managed to beat the banks at their own game by offering non-insurance financial products," they are the exception rather than the rule.
"The Web sites that succeed will be multiple-product sites," he said. "There is a clear relationship between breadth of capabilities and how much time you spend and how often you come back to a site."
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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