Too little discussion of insurance and the Internet (including in this publication) is based on systematic surveys of carriers, agents, and consumers. The just released Big I Future One 2001 Technology Study summary provides some help and it's available on the IIAA site for download (www.iiaa.org). The full report, about 450 pages, is available only to the Future One sponsoring groups.
Obviously, it's particularly important that agents and carriers find common ground relative to the Internet. Without it, they're not likely to have much success. It's also valuable for agents to understand what, in general, other agents want and do with respect to the Internet. An agency doing little may come to realize that the train is leaving the station. Or more aggressive agents may see that the rest of the pack is catching up and it's time to take the next step.
But it's most important for carriers and agents to get a sense of what consumers expect. Some agents are passive about the Internet because the customers they happen to talk to aren't chomping at the bit to access their policies on line. But anecdotal "surveys" of a handful of customers can be misleading. The Future One survey includes responses from 2,887 consumers, 201 small businesses, 667 agents, and 35 carriers - not the whole world, but enough that the survey is worth paying attention to.
Findings on consumers and sales
Do consumers want to buy insurance on the Internet? How do they find sites to shop? What kind of sites do they frequent? The study seems to confirm what many of us have suspected: consumers will shop, but generally not buy insurance on the Internet - at least today.
What consumers do want: Three out of four personal lines and small business consumers prefer to use the Internet to shop for insurance, about half want a quote, not quite a third want to find an agent through the Internet and one in four want to be able to buy and pay for a policy - a greater proportion than I expected and something agents and carriers should pay attention to.
Given the high percentage of consumers who want to shop for insurance online, agency brochure sites clearly aren't adequate. Consumers want depth of information that can help them understand their needs and alternatives. If they don't find that on an agency site, they're likely to look elsewhere. Internet mavens tell us that content means everything on the Internet and that's born out by the Future One study. Though most agents don't want to offer quotes through their Web sites, for all kinds of reasons, that may be a mistake, since a significant percentage of consumers (more than half according to the study) are looking for just that.
Finding sites: About two thirds of personal lines and small business consumers used a search engine to find relevant sites; one third got the domain name from non-Internet advertising; and about a quarter via Internet ads or links. Businesses find links in magazine articles (29%), but consumers seem less interested (13%). Referrals are somewhat important for consumers (12%) and small businesses (19%).
What surprises me here is how important search engines are. That favors national organizations over local agents and reinforces the importance of a branded, national agency Web site locator.
Types of sites: Independent sites, like InsWeb, are used by about 75% of the personal lines and small commercial lines shoppers. Single carrier sites appeal to 57% of personal lines consumers and 75% of small business. Only 8% of personal lines and 34% of the small commercial lines shoppers visit agency sites.
One could draw the conclusion that agency Web sites don't matter for personal lines but are important for commercial lines. But it's also possible that consumers simply can't find relevant agency sites (the agency locator issue) or once they do are disappointed with what they find (lack of good content and quoting).
No Internet: More than one in four consumers do not use the Internet to shop for insurance. That means three in four do - and that's an extremely important finding! Many agents and carriers think that consumers aren't interested in using the Internet for insurance shopping purposes and therefore think that there isn't much need to pay much attention. According to the Future One study, that isolationist position is absolutely incorrect.
From my point of view, the Future One findings suggest that independent agents and regional carriers are particularly at risk because of the Internet. National, high-budget sites will get most of the Internet traffic. Consumers will continue to have a hard time finding local agents and regional carrier sites. The Internet environment favors a high volume of visits to a few sites that dominate a niche. That spells trouble for little guys, unless the high volume sites bring them customers.
The single most important way to succeed in the only-a-few-can-win environment is for independents, as a community, to have a significant Web presence that provides valuable content and then points the consumer to individual agencies for more information, a quote, and personal attention. The IIAA is a natural to create and brand a national, high-volume site. Perhaps the "Trusted Choice" initiative is a good first step in the right direction.
Customer self-service findings
The Future One study provides some information on consumer interest in on-line self-service, but only for personal lines. I hope that the next technology study looks harder at this important area.
Self-service: Half the consumers prefer to check coverage and bill payment via the Internet. About a third would like to enter claims information and almost 60% want to track claims. Forty-one percent would like to be able to make routine policy changes.
The message? Consumers want online self-service. That doesn't mean they won't call the agency sometimes. It means they want a choice. Agents that don't provide out-facing services will increasingly be considered unsatisfactory. And delegating out-facing services to the carrier will tend to disintermediate the agent.
Findings on agents
Survey results suggest that agents are aware of the need to use the Internet to improve customer service and they want help from carriers via the Internet to do so, but from what I can tell, agents are asking for in-facing not out-facing services. They want online functionality to use themselves, not to make available to customers directly. Given consumer desires noted in the section above, agents may be making a mistake.
According to the survey, agencies are adamant about getting carriers to help them provide better customer service in the areas of endorsements, certificates, issuing commercial lines, uploading forms to carriers, binding commercial lines, and issuing personal lines. To a lesser extent, agents believe these services will also make their operations more efficient.
Almost all agencies (85%) want online access to loss histories and 70% want loss control tools. Three-fourths want access to company marketing support and information about the carrier and products. Slightly more than half want to manage their accounts current and view compensation status. Half want help from the company to link prospects to them and 44% want leads with 41% expecting the carrier to provide relevant information to consumers.
It's clear that agents are interested in doing better
by their customers and getting help from their carriers through the Internet to do so. The Future One summary suggests that agents will increasingly align themselves with carriers that have the technology support agents need to serve their customers effectively. That's an important lesson for carriers.
The convergence of expectations
The Future One summary contains a number of findings on the comparison between agency and carrier expectations. Encouragingly, there is a high correlation between what agents consider highly interesting and carriers highly important.
But there are areas of sometimes substantial disconnect. Agents want carriers to allow them to handle new small business commercial lines applications, underwriting, rating, policy issue, and payment significantly more than carriers want to provide it. Small commercial lines is a pain point for many agencies. It may be a significant source of revenue in total, but the sales and submission process is too expensive in proportion to the commission received. Agents want carriers to provide them the tools they need and then get out of the way. Carriers that have done a good job with small commercial lines support are winning kudos and business from carriers that can't get off the dime.
In other areas of disconnect, 70% of agents want loss control tools, but only 40% of the carriers are interested. Agents want marketing materials through the Internet (76%), but carriers think it less important (68%).
Both agents and carriers are high on new personal lines underwriting, rating, submission, policy issue, and payment as well as viewing loss histories and providing marketing support materials.
Findings on carriers
The interesting story here is mismatch between carrier priorities and consumer desires. Only 30% of consumers are interested in carrier agency locators, but 58% of the carriers surveyed considered it very important. On the other hand, three-quarters of the personal and small commercial lines consumers want company and product information, but only 38% of the carriers gave that a high rating. Half of the small commercial consumers want to be able to make routine changes on line, but only one-third of the carriers think it is important.
The good news is that even though carriers don't provide exactly what agents and consumers are looking for today, virtually all claim they'll have a good bit of what agents and consumers feel is important available in two years, with the exception of complete commercial lines solutions, personal and commercial lines direct sales, and some other policy holder and agency accounting functions.
Connectivity
According to the Future One survey, 87% of agencies have Internet access for all employees, with 19% via T1, 57% via DSL or cable, 20% by dialup, and 4% with none. By the end of 2003, 52% of the agencies expect to have T1 or faster, 44% with DSL or cable, and only 4% with dialup. Those are important findings for vendors offering ASP services.
Incredibly, carriers reported a very different picture. Currently, half provide no Internet connection and half do so via dialup. By the end of 2003, 43% expect to have T1 or faster, and 28% DSL or cable, with 29% still wanting.
Summary
The Future One study points to a divergence between consumer desires and carrier and agency priorities. Consumers want to do more with insurance on the Internet. Agencies and carriers are more interested in interacting with each other - a persistent theme we've pointed out more than once. The study also points to some discontinuities between agency desires and carrier priorities. The overall message: Why aren't agents and carriers paying more attention to their customers?
One response I'm sure we'll see right away is dismissal of the findings of the study. After all, as the saying goes, "There are lies, damned lies, and statistics." Maybe, but agents can't dismiss the consumer section and then use the agency section to beat carriers about the head and shoulders. And what else do we have to go on that's better? Do random conversations - agents with customers or carriers with agents - count for more? Do we know more about what our customers want (or should want) than they know themselves? As Bob Lewis likes to point out in his Infoworld column, that's an element of CEM, customer elimination management, the too common practice of choice in this and other industries.
© Copyright 2002 by Sound Internet Strategy. All rights reserved