Insurers Agree: Customers Still WantAgents To Help Them
Agents and brokers remain an integral part of the distribution process in this increasingly high-tech world, insurance company executives declared recently at an industry forum in New York.
Even customers with small, home-based technology businesses say they want an agent or broker to guide them in selecting commercial insurance, said William D. Smith, president and chief executive officer of Kemper Insurance Companies, based in Long Grove, Ill.
Although such customers may readily buy their homeowners or auto insurance via the Internet, they are unwilling to "bet their businesses" on their own knowledge of commercial insurance products, Mr. Smith said during the PricewaterhouseCoopers 12th Annual Executive Conference for the Property-Casualty Insurance Industry.
Galen R. Barnes, president and chief operating officer of Nationwide Insurance, said that under the Columbus, Ohio-based company's "customer choice model," the customer decides whether he wants to deal with an agent. While this approach works well with exclusive agents, Mr. Barnes said that Nationwide has not yet figured out how to implement it with independent agents.
A few years ago, Allstate Insurance, based in Northbrook, Ill., was contemplating whether to go with an "Internet-direct only" or a "fully integrated" approach to writing business, reported Steven L. Groot, president of direct distribution and e-commerce for Allstate Property & Casualty.
"At the height of the dot-com fever there was a lot of concern out there as to whether consumers were going to e-insurance, e-coverage" and about what this meant for insurance distribution, Mr. Groot recalled. However, Allstate focused on whether what its customers wanted was undergoing change, he said.
"We quickly resolved that the customerwanted to keep an agent in the process somewhere," Mr. Groot stated. Customers indicated to Allstate that they wanted more convenience and more service than could be provided by a 1-800 telephone number or over the Internet, he explained.
Mr. Groot said that in terms of developing a technical infrastructure, the easiest part was to set up an Internet site and the Allstate call centers. The hard part was integrating agents across the country "with an online, real-time system that could port from the Internet through the call centers to their offices," he stated. Another challenge was to provide the agents with the training to use the new technological tools, Mr. Groot added.
But Allstate's experience has been "that the customers haven't moved [to the Internet] as quickly as a lot of people thought a couple of years ago," he said.
While there are many reasons for this, it is Mr. Groot's personal view that insurers are "confusing" customers with the notion of having to choose among different coverages. But approximately 85 percent of home and car owners are "just not ready to push a button and make a decision," he said.
According to Mr. Groot, "most people want to know that there is someone on the street they can go strangle if something goes wrong or if they have a claim," or if they need help to better understand the insurance process.
He noted that individuals are using the Internet to gather information, with the Allstate Web site seeing one million "unique hits" per month. But while many people are obtaining quotes, "the basic rule is that no one is buying insurance on the Internet," said Mr. Groot. In fact, Allstate generally finds that those who obtain insurance information from the Web then go to an agent or a call center to make the purchase, he said.
Mr. Barnes indicated that it is becoming increasingly clear that insurers employing the "low-cost, call center-based model" are "starting to compete." In response, Nationwide decided to "segregate the functions" of agents and call centers.
"One thing we've been working hard on with both the independent agency companies and in our exclusive agency companies is the issue of the back room," Mr. Barnes said. Both exclusive and independent agents are offered the option "to vend out or send to us their back room" operations, he reported.
Similarly, Mr. Smith stated that Kemper has decided "to drive all customer-centric activities through the agents." Thus, Kemper gives agents the option of deciding what they want the Kemper service centers to handle and what they want to do themselves.
Mr. Smith said that this allows agents to do what they do best: "go out there and sell" while allowing someone else to take over renewals, endorsements, processing and other functions that support the agent.
As an example of the seamless support that is possible from insurance company service centers, Mr. Smith reported that when the Sept. 11 attack in New York displaced several Kemper agents, some of them asked that Kemper's service centers take over their operations for 24 to 48 hours.
"I doubt any of the agents' customers were ever aware that the switch had been made to our people from the agents' own customer service representatives," Mr. Smith stated.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 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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