Customer experience

Although many insurers are taking the necessary steps internally to grow their books of business, many realize that they need to look outward and align with third-party distribution channels that have developed their own internal IT competencies.The impetus to raise the stakes on small-business insurance marketing is significant because no single carrier has more than 3%-4% share of market, says Ed Gillman, president and CEO of AgentSecure, an Atlanta-based insurance agency serving the small-business market.

In May 2001, eWausau.com, the Web property serving small-business customers developed by Wausau, Wis.-based Wausau Insurance, was shut down after executives at the company realized that small-business owners were reluctant to use the Web to research and shop for insurance.The company shut down on the heels of consummating a strategic alliance with Atlanta-based InsureZone, a partnership that would expose eWausau to even greater distribution opportunities than it could muster alone. But eWausau is now gone, and InsureZone-a startup provider at the time-carries on the legacy.

For years, Hispanic consumers have had to settle for "Americanized" versions of a wide variety of consumer goods-financial services products included. But as the Hispanic population in the U.S. rapidly ascends, industry experts insist that insurers must adopt new selling strategies to fully capitalize on a ripe opportunity.By the year 2025, Latinos are expected to represent the largest minority group in the United States. And, as this growth emerges, some insurers have begun to customize products to meet the needs of this burgeoning ethnic demographic group.

Using Global Positioning Satellite (GPS) and cellular communications technology to gather information about when and where a motorist is driving, United Kingdom-based insurer Norwich Union is launching a pilot study this summer that could play a role in transforming the way auto insurers underwrite policies.Called "Pay As You Drive," the two-year study will involve retrofitting the cars of 5,000 Norwich Union policyholders with a "black box" that will gather and transmit vehicle and driving data to the insurer's back-end systems. Norwich Union statisticians will then analyze the data to determine which variables affect risk and claims, and those results will be used to calculate usage-based premiums.

Already on the defensive about the use of credit scores for underwriting, property/casualty insurers now face another assault on one of their prime data tools in the nation's largest market for homeowners insurance.In late April, California Insurance Commissioner John Garamendi all but banned carriers' use of the main data source to underwrite and rate homeowners insurance policy. For 11 years, the Comprehensive Loss Underwriting Exchange (CLUE) has tracked claims on properties and property owners supplied by carriers of the nation's homeowners insurance policies.

Last year, for the first time, more than 50% of banks in the United States produced some sort of insurance revenue.According to a "Bank Insurance Fee Income Report" from Michael White Associates, 4,359, or 52%, of all commercial banks or federally insured savings banks in the United States generated revenues through insurance sales.

Balboa Insurance Group Inc. needed to integrate its legacy-based customer data with an enterprisewide CRM system. Executives considered a costly systems conversion project, but opted for a middleware solution instead.Balboa Insurance Group Inc. faced a modern-day information technology conundrum. It had critical customer information locked away in its siloed host applications and couldn't get it out to support new Web-enabled business processes.

The Hartford's affinity program with the AARP is a direct-marketing success story. However, the technology supporting the program is the secret to the carrier's achievement.In 1984, the American Association of Retired Persons (AARP) approached The Hartford for a third-party affinity relationship that would enable AARP members to purchase auto and home insurance from the carrier.

The potential savings for agents and carriers using real-time interfaces amounts to thousands of hours-and dollars-each day.A billing inquiry initiated through an agency management system takes two minutes, whereas the same inquiry takes eight minutes by phone, and nine minutes by carrier Web site. Those are the results of an agency workflow study conducted last year by Applied Systems Client Network (ASCnet), the user group for Applied Systems Inc., University Park, Ill.

In response to how Allstate Insurance Co. handled its employee-agents during its reorganization in 1999 and 2000-and to prevent other employers from repeating that action-the Employee Benefits Protection Act of 2003 was introduced in Congress in March.The Northbrook, Ill.-based carrier reorganized the company to reduce expenses by $600 million annually, to bring its agents under one program, and to integrate its agency force, direct response call centers, and the Internet. As part of that plan, Allstate terminated 6,400 employee-agents in June 2000, and offered them the option to convert to independent contractor status.