Insurance distribution models continue to evolve in response to customer demand. In the first wave, insurers such as Progressive offered a way to quickly and easily request and compare quotes, bind and buy auto insurance policies online, sometimes at a steep discount to traditional "main street" agents.

Now, as many as half of small-business owners say they would be willing to buy insurance direct over the Internet, according to Deloitte's "Voice of the Small-Business Consumer" survey. And a fifth of those who bought property, general liability business-owners policies and professional liability insurance have initiated such a purchase online, either through an insurer's website or an aggregator site to shop multiple quotes. However, until recently, opportunities to do so haven't been widely available. Of those respondents, 21 percent had purchased individual auto, homeowner or life insurance online, Deloitte found, and nine of 10 were satisfied with that purchase.

Now that more people are comfortable with buying online, commercial specialty lines carriers such as Hiscox, life insurers such as Foresters and OneAmerica among others are expanding their use of e-applications as a way to appeal to consumers and agents, differentiate themselves in an increasingly commodified market, lower costs and increase their retention of consumers and agents.

Portal functionality for agents and insureds was found to be a top initiative for personal lines carriers in "Business and Technology Trends: Personal Lines," a recent survey from Novarica, a research and advisory firm focused on business and technology strategy for insurers. Such portals typically have offered policy, billing and claims inquiry, but more recent iterations strive for real-time quoting in an effort to improve ease of doing business and drive revenue. By extension, successful portals also drive operational efficiencies by eliminating multiple data entries and improving data quality.

In Novarica's separate agent survey "Direct Online Small Commercial Insurance: Preparing for The Inevitable," more than three-quarters of the agents said online quoting and sales platforms would be positives for their business, if they could be incorporated into their own agency websites, and if insurers offered online marketing support. That's despite agents' legitimate concerns that agency portals and online distribution pave the way for their own disintermediation, Novarica says, as long as carriers are willing to pay commissions on direct sales.

The main reason agents support online distribution, Novarica says, is that they benefit from the simplification of both processes and products. Ultimately, agents and consumers want the same things, even if their user experiences are different.

"Agents want the transaction to happen fast and easy, get a price, decide whether they want to sell it and move on," says Matt Josefowicz, a managing director at Novarica. "This is one thing everybody has in their mind as they are building their agent portal. Even if they have no strategic decision to go direct in the short term, everybody holds that as a possibility and is designing their agent portals in a way to not close that door, even if it's a line that isn't heavily direct today, like small commercial or life and annuity."


In the United Kingdom, small businesses already buy their insurance online or over the phone rather than through an agent or broker, explains Kevin Kerridge, head of direct, Hiscox USA, a specialty insurer serving small businesses. In 2009, he was tasked with bringing that model to the United States. At the time, Hiscox USA offered kidnap and ransom, terrorism, and entertainment and production insurance, but no small-business insurance products.

"I don't want people to think of us as an insurance company," Kerridge says. "We are effectively a technology and marketing business that just so happens to be in the insurance space. It's an important mindset to drive. When a consumer comes to our website, they don't compare us to GEICO, Progressive or The Hartford. They compare us to Amazon, Zappos and Expedia in terms of their experience."

In 2010, Hiscox began offering U.S. businesses the ability to get a quote online, enter payment details and get their policy immediately, Kerridge explains. The platform also supports consumers who prefer to get an online quote before calling a service center to complete the transaction. They also can do everything from generating a quote to binding the business over the telephone. In 2012, Hiscox expanded its distribution through a partnership with Bolt Insurance Agency. Within six months, more than 400 Hiscox small-business policies were issued through the platform, making Bolt one of Hiscox's top five distribution partners for small-business products. In the fourth quarter of that year, quote volume increased 5 percent on average.

The platform and business logic was built on homegrown Hiscox technology, Kerridge says. Bolt offered the portal for distribution and integration with Hiscox's issuance and payment systems, extending Hiscox's reach into affinity groups, including the National Federation of Independent Business, and agency distribution partnerships. The project was completed in eight weeks.

"When we sign on an IT consultant in New York, for example, all the question sets, rules and everything else is built on the fly, based on the fact that we know you are an IT consultant in New York," Kerridge says. "We've got 100 different business classes that we target, in 40 states, with three different products. Imagine that matrix in your head; that's quite a complicated system you have to build to take into account all the permutations."

Agents Wanted

The next step, which was scheduled for pilot this summer, Kerridge says, is to extend access to the platform to traditional insurance agents, who would use it to build quotes for customers and bind the risk. Customer adoption shouldn't be a challenge, Kerridge says, as the platform shortens the sales cycle and removes the burden of servicing low-margin business.

"Part of the play for us is that this platform is very low touch. We produce the policy, send it to the customer and copy the agent. We do the renewal, the claims, the mid-term changes; any payment issues, we will mop up and bill them," Kerridge says. "They know their customers are getting great service. That's one of the things we've got a good reputation for." In addition, agents will receive a monthly report of all the quotes, policies, renewals and adjustments.

"This is a very important part of the journey we're on at Hiscox that will allow agents to leverage the investment we made in our direct technology and profitably handle small $500 premium risks for the benefit of their customers," Kerridge says.

Asked what he would do differently, Kerridge says he would have extended the platform to agents much sooner. "There's a massive opportunity in leveraging that technology for agents. I wish we would have started that in parallel with our direct business."

Change is coming to insurance distribution, Kerridge says, but regulation poses a significant barrier to entry for new entrants as well as established insurers, which have billions of dollars of premium tied up in a traditional agent channel.

"They can see this coming but it's difficult for them to make a move because there is so much to lose," Kerridge says. "In five years, this whole business insurance area is going to look entirely different. Once one big brand breaks ranks, that's it. Most of the others will follow."


For personal insurers, direct sales over the Web are common, but those that sell through agents also are investing in sales and service portals.

To better serve middle-market families, the foundation of its membership base, Foresters, a fraternal life insurer serving members in the United States, Canada and the United Kingdom, needed to develop a distribution strategy that acknowledged members' and agents' increasing comfort with and desire to use technology, explains Tony Poole, president of Foresters U.S. Branch.

"We knew it wasn't just about product. It was a process play," Poole says, detailing the organization's long-list of technology initiatives, which have included reengineering its back office, policy admin, new business systems, point-of-sale and illustration systems and e-applications. "The e-apps themselves, from iPipeline, are only one component of our game plan for processing new business in our simplified-issue strategy," Poole says.

Forester's whole-, universal- and term-life products were the first to be launched on the brokers' portal. On the front end, iPipeline's iGO, a cloud-based electronic form, enables agents to enter data while internal logic mitigates problems associated with paper-based applications, such as inverted numbers, incorrect Social Security numbers and postal codes, eliminating much of the back and forth that slows the policy-delivery process, Poole says.

"By the time it's electronically sent, it goes directly into the underwriting carrier's back-office system, through their new-business system into their admin. So you speed up the process significantly," Poole says. For simplified issue products, the paper-based processes took seven to 10 days from submission of an application to getting the business issued. "With iPipeline, from the receipt of the application to issue, we have got it to less than four days. And in some cases, it's two or three days. We've basically halved the process time."

Additionally, by eliminating not-in-good-order applications, agencies no longer need to scrub applications, increasing their productivity and reducing agent frustration, before sending them to Foresters. "Producers have a better experience with the agency and the carrier. And the speed to getting paid is huge," Poole says.

Automated reports and messaging keep the various parties aligned, Poole says. "We built in the mechanisms so that everyone is fully engaged. Our partners have the information and know what's happening, and there's various reporting that goes to each of the partners."

Helping agents

Foresters sells only through agencies and agents, and remains committed to growing face-to-face distribution for the middle market, a spokeswoman says, and its national distribution partners continue to recruit new agencies to sell Foresters products.

To support them, Foresters is currently implementing MajescoMastek's Elixir Distribution Management to manage multiple distribution channels, multi-dimensional relationships and hierarchies.

"People have different levels of comfort with different means of communication, so there needs to be segmentation of customers and producers," Poole says. "Not everyone is coming at us with the same level of knowledge, and we have to accept that it's going to take time. If you've got producers who are doing significant volumes - and their staff is tracking that - it's probably best that they are online and using our technology," Poole says. But for one-off situations, where agents may not be familiar with where to find information, Foresters offers both the call center and a sales desk for inbound calls.

Foresters does not currently offer a single view of the customer, but in partnership with MajescoMastek, it is developing a custom CRM system, called NB+U [New Business and Underwriting], which is intended to help keep all stakeholders on the same page. That will be increasingly important as Foresters' fully underwritten and final expense products also are made available through the iPipeline platform, Poole explains.

"For fully underwritten business, there's a lot more back and forth going on, with medical information and so forth, so we have built in automated processes that are tied into databases," Poole says, and produce automated messaging to the broker portal and reporting systems. "It's not yesterday's news. It's current. The intent that we are driving is less dependency on manual intervention, less dependency on having to talk with someone and putting the power back in the producers' hands. That's very powerful."

In considering the progress Foresters has made, Poole says regulatory lag has been the company's biggest challenge. "It's not that they are not moving, or are not sensitive to this, but there is a lag," Poole says. "The guidelines, processes and requirements were based on processes that come from 20 years ago. It's less about peoples' and distributors' acceptance and more about dealing with the regulatory environment - to comply with the intent and protect the interests of all the parties while taking advantage of a streamlined process," Poole says.


To advance its vision for straight-through-processing and enable customer self-service, OneAmerica Financial Partners also uses iPipeline's iGo illustration and application systems for all of its whole-, term- and universal-life products, as well as fixed, variable, immediate and indexed annuities. The company also uses iPipeline's PolicyHS application for online self-service, explains Gregory Poston, VP individual operations.

"We have a complex business, and I view some of these tools as being incredibly valuable in making it easier for producers and consumers to do business with us," Poston says. "A life insurance application can be 25 or 30 pages long. It's daunting, particularly for a new agent to successfully walk their way through a transaction because of the complexities, not only of the products, but the process itself."

Agents must be able to illustrate a product, understand the features, complete an application and know what products are available in what states, what forms go with those products and what forms are valid in what states, as well as what products are available at what ages, and for what amounts, he explains.

As part of their e-applications implementation, all the information a producer enters for a client goes straight through the illustration, to the electronic application, then flows automatically into the policy admin system, Poston says, eliminating the need to rekey data. That speeds the process while making it more accurate and improving the experience for consumers, agents and the carrier. From submission to approval, the process has been reduced by a third, he adds.

"We've only been live across our agency distribution for about a year, and we are already achieving 50 or 60 percent adoption of the tool," Poston says. "Everybody has done bits and pieces of that, but many companies are not there yet."

Help yourself

Where OneAmerica may be ahead of the industry, Poston says, is in leveraging those technologies for customer self-service. As part of the initial rollout, policyholders are now able to do name, address and beneficiaries changes, and submit loan requests. More capabilities will go live in the fourth quarter, he says.

"The client can perform some of that on a self-service basis rather than relying on the agent," Poston says. "But we can also configure this so that the agent can participate. The client could call the agent's office and say 'I just moved. I need to change my address.' The agent can fill out the address change request, then route it electronically for their signature. The agent benefits from the customer 100 percent self-servicing, or the agent can participate."

While agents have been quick to embrace these functions, so far, consumers have moved more slowly.

"People don't access their insurance policies like they do their bank accounts; they are in there multiple times per week," Poston says. By extension, most policyholders have never authenticated their accounts online, he says.

To facilitate that process and increase consumer adoption, OneAmerica implemented a security quiz that accesses public information to verify a user's identity. Users answer a handful of questions, such as which addresses at which they have lived, or what vehicles they have owned, by selecting from multiple-choice answers. Verified users are linked over to a private site and prompted to create an account, simplifying future access, Poston says.

OneAmerica does not have a single view of the customer, but as they begin a rewrite of the agent, consumer and policyholder portals, marketing has requested more robust monitoring of what clients and agents are looking at, Poston says.

"This system essentially unburdens the agent. It allows the agent to focus on what they do best, which is work with their clients and design financial solutions with their clients," Poston says. "That's true on the consumer self-service side as well. We get a lot of service requests from consumers and they are not in good order, and that just slows the process down and results in a less favorable experience."

From a corporate vantage, the tools also help address the challenge of an aging industry, and one that has difficulty recruiting new workers, Poston says.

"These technologies not only make the job easier, young people are simply more comfortable with these technologies and expect to work in an electronic mode," Poston says. "Ours is a complex business and that complexity frustrates people, especially agents. This is a competitive advantage. At the end of the day, the products become commodities. Your UL is like my UL; my whole life is like your whole life. It's the service and the ease of doing business where there is still a real opportunity to distinguish one's self, and that's why this is so important."

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