It has become popular among financial services experts to recognize the Internet as "just another distribution channel." Perhaps many of these same experts once believed the Internet would become the end-all, be-all communications link between businesses and consumers, but their bubble burst about the same time that the e-commerce boom came to a crashing halt.Rather than bemoan what the Internet isn't, it's more beneficial to analyze how carriers are currently using the Internet and how the Internet likely will evolve. Contrary to earlier-and popular-beliefs, the Internet will not replace the longstanding and integral relationship between agents and consumers. Although banks have been successful in driving some traffic away from their branches to their Web sites, insurance is a more complex, personal product than checking or savings accounts.

Many consumers now use the Internet to gather information about their insurance options, but a large majority still prefer to sit down with a knowledgeable professional before they commit to a particular product. In a way, the Internet is demystifying insurance, making consumers more intelligent purchasers, a benefit that is often overlooked.

In this issue, our Special Report highlights other significant benefits that carriers have garnered from the Internet. For example, Web-enabled policy administration systems are delivering enterprisewide results. Updating core systems with newer database designs and easier-to-integrate architectures can give carriers more information that can be used to streamline operations and increase cross-selling and up-selling opportunities, writes Matthew Josefowicz of Celent Communications Inc.

The Internet is also revolutionizing the concept of customer service. Some leading carriers are using the Internet to collect data, provide quotes and then close sales through call center representatives. John Hancock, featured in our Cover Story on life insurance on the Internet, began refining this approach in the mid-1990s for term life insurance and experienced a breakthrough year in 2000, increasing overall close rates by 300%, according to Todd Eyler, an analyst with Forrester Research Inc.

It's true that the Internet is not-and likely will not become-a major revenue-producing venture. But its benefits today should not be overlooked, and its potential should not be easily dismissed.

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