Darwin's theory of natural selection proclaims that the strong species will thrive, while the weak will vanish. It's not unlike carriers' Web sites, where the best ones may have the inside track on survival.In the mid-1990s, when insurance carriers were developing corporate Web sites, many discovered they could do little wrong in the eyes of their online constituency-particularly casual users with modest expectations.

Most carriers basked in the glow of an investment that by most accounts was simple to maintain and easily attracted visitors. But the electronic honeymoon appears to be over. Industry analysts, consumers, investors and business affiliates all declare that there's growing pressure on carriers to raise the bar and develop next-generation Internet programs.

The online brochureware that once appeared cutting-edge now won't make the cut. Web sites can't be anything short of intuitive, interactive, navigationally quick and content-rich.

But therein lies the problem: What was once a golden opportunity has turned into an uncertainty for carriers who have watched their Web sites fail to reach full potential. These carriers can still construct viable Web channels that are in touch with demands of users, but as industry observers note, time is of the essence.

"You've heard the expression grow or die: that's appropriate for carriers as they size up their Web-based goals," says Todd Eyler, senior analyst for Forrester Research Inc., a Cambridge, Mass.-based consulting firm. "Presently, carriers have not done a good enough job in niche marketing on their Web sites.

"In other words, they haven't made a distinction about the way a 50-year-old individual uses their site and how a 20-year-old uses it," he says. "They also have fallen short in the area of customer service. A Web site should be robust enough to where a user is never more than two clicks away from doing something useful, such as obtaining a quote, locating an agent or changing an address."

User empowerment

There are a series of underlying factors that determine the direction of a corporate Web program, industry observers say.

Due to a complex product line, life insurance providers, for example, must invest in different Web technologies than property/casualty carriers. But in the bigger picture, many agree that there are universal priorities shared by all carriers-namely consumer empowerment and overall online flexibility. To provide these capabilities, carriers' Web strategies must include:

* The expansion of technology that enables consumers to execute action-oriented tasks such as online calculators, agent locators, electronic bill payment and presentment, e-signatures and Web chat.

* Increased automation to benefit agents-either from a corporate Web site or from an intranet or extranet site. Consumers have indicated that agents will continue to play a significant role in their insurance-buying tendencies. Building an e-business infrastructure connected to agents enables insurers to avoid paper gridlock to better manage information resources.

* Continued integration of Web sites with other segments of the operation, including customer contact centers. This is as much a hard-asset investment as it is an overall philosophy. Smart carriers have learned that the Web is still not the be-all and end-all for consumers. A so-called "clicks-and-mortar" strategy provides flexibility so consumers can establish contact on the Web, follow up with a phone call and then meet with an agent.

2001: Cyberspace odyssey

These challenges must be addressed in the years ahead, observers insist. If they aren't, marginal Web sites could become obsolete.

Some of the most glaring corporate Web weaknesses have been revealed by Hartford, Conn.-based market researcher Conning & Co., which offered a scathing review of insurance carriers' attempts to establish a successful Web blueprint. In a report released in February, "The Internet and Property/Casualty Insurance: Lost in Cyberspace," Conning revealed that many carriers have not only failed to market their own Web sites effectively, but they have not developed an Internet strategy with a clear vision. "Most insurer Web sites fail to give consumers a compelling reason to use them," the report states.

Carriers that sell workers' compensation insurance understand that challenges abound in their efforts to simplify for business owners what can be a very complex and cumbersome insurance research process.

When Wausau Insurance Co., a provider of workers' compensation and business owner's insurance, took the wraps off its first-generation Web site in the mid-1990s, the company experienced what settlers traveling westward in covered wagons might have felt. On the one hand, great anticipation of the possibilities; on the other hand, great apprehension about the uncertainties of the Web.

Spartan in its design and functionality, www.wausau.com was constructed to provide an alternative "touch point" for the Wausau, Wis.-based carrier's core clientele, the upper- to middle-market business owner.

Along the way, Wausau's Web team learned a great deal about the vicissitudes of the Web. As Wausau began to sell more coverage for small businesses, the company concluded that its corporate Web site couldn't fully meet the needs of small, medium and large customers from one dedicated Web site. So it created an ancillary site, www.ewausau.com, to focus exclusively on the small-business segment.

"There were too many components of the site that were designed for the upper- to middle-market customer," says Raymond Hall, eWausau.com's managing executive for distribution.

"In 1999, we began to lay a foundation for eWausau.com to serve the small-business customer. We established a whole separate electronic business, with its own underwriting system and call centers, and integrated it within a new Web site at www.ewausau.com," he explains.


The establishment of eWausau.com symbolized more than the launch of a Web property; it served as a call to arms that pushed Wausau to reshape its attitude of what a Web site should be for all customers-large, medium or small.

When Wausau developed its first-generation site, the overwhelming inclination was to prominently emphasize its product line on the Web site. But this turned out to be the wrong strategy. Wausau and other carriers have learned that it is smarter to take a customer-centric approach on the Web rather than a product-centric one.

"You can't lead with product on the Web, at least when you're marketing life insurance," says Michael Battaglino, corporate vice president of Internet marketing for New York Life Insurance Co., New York.

"People are mystified by life insurance, so we found that as we redesigned our Web site last year, it was important to emphasize life events, such as getting married, buying a home, raising children and retirement. We took a back-door approach where you frame an experience for the user and then lead them to the product. It resonates much better this way."

"Like many carriers, when we first put up a Web site, it was from an insurance perspective, punctuated by a lot of insurance jargon," Wausau's Hall explains. "It was not from a customer's perspective."

Instant gratification

Another cardinal lesson learned was that a Web site must be intuitive enough to ensure that a consumer doesn't spend an hour online researching products. Customers equate the Internet with speed. Laboring on a Web site to conduct research won't cut it for a user who expects instant gratification.

In Wausau's case, it was paramount to provide Web visitors with a crystallized view of business owner's insurance. Unlike large businesses, small businesses have to contend with many more business identification codes. When eWausau.com was launched in mid-2000, it wasn't uncommon for a business owner to spend 30 minutes or more sifting through the labyrinth of business code classifications before submitting a policy application.

To streamline the process, the carrier re-engineered its site, equipping it with intuitive default technology that now enables an applicant to identify several specific details about their business. Once done, the system quickly chooses standard coverage terms specifically designed for that business type.

"Rather than a small-business owner spending 30 minutes researching and submitting an application, they can now do it in five to seven minutes," Hall declares.

When the application is submitted, Wausau electronically reviews it through its underwriting system, and can provide bindable quotes within one business day.

Many of the investments carriers have made to improve their Web sites, such as making them more intuitive, are regarded as no-brainers. But to what lengths do they need to go to provide more sophisticated services and technologies in a Web-based environment?

A faction of users have graduated beyond basic functions to embrace technologies with more teeth. But a carrier has to be certain that sophisticated technologies will be accepted before investing in them.

In 1996, Progressive Insurance Co. concluded that its customers would participate in electronic bill payment and presentment (EBPP).

A year later, the Mayfield Village, Ohio-based carrier automated all of its premium notices, building an interface between its mainframe-based system that handles premium notices and its Web server.

Progressive, which writes more than $6 billion per year in auto, motorcycle, watercraft and recreational vehicle policies, learned that most participating customers preferred to pay premiums via credit card. Knowing this, it developed the EBPP program around credit-card processing rather than electronic fund transfers (EFTs).

A program built on an EFT platform might dissuade consumers who are concerned about creditors freely accessing their checking accounts. Online credit card-based programs come with their own set of concerns, such as assurances of security. But Progressive was able to convince consumers that credit card information would be protected.

"We provide a fully secure Web site where all credit card numbers are encrypted. To further enhance security, we don't store card numbers," says Toby Alfred, Internet site manager for Progressive.

Moving to Web chats

Although Alfred declined to provide statistics, she claims the success of the EBPP program enabled the company to proceed confidently with other similar technologies. One of those is Web chat.

One advantage of Web chat is that consumers-while comfortable with the Web-still want some degree of human interaction somewhere in the process. In some ways, Web chat is the electronic version of a face-to-face consultation with an agent.

Progressive's Web chat program currently is being piloted in nine states. When consumers log onto www.progressive.com, they can access Web chat on any of the page links. "Users click an icon and a window launches. It's very similar to AOL's instant messaging feature," Alfred says. "As quick as someone can type a message, one of our representatives can respond.

"It enhances the overall consumer experience, but on our end it's not easy to implement-it's very complex," she adds. "It's definitely something that requires outsourcing the technology to an application services provider."

The whole purpose of a Web chat program is to enable quick responses. When a customer types in a question on a PC screen, they want the answer back in real time-not in the form of a return phone call, Alfred says. This puts pressure on CSRs to become experts in various product lines. As a result, Progressive offers extensive training for its CSRs.

Wausau also has a Web chat feature to www.ewausau.com, making it available in 49 states. So far, it has met with a good degree of success. "We have licensed agents who can actually perform several Web chats at once. They've become that proficient at it," Hall says.

"The training is the key," he adds. "We have an online resource center where an agent becomes trained in various aspects of the business, which includes underwriting."

As agents move ahead with the training, they do a lot of cutting and pasting of pre-formatted answers to basic questions. Eventually, they learn to field more complex queries that involve more than just a cut-and-dried response, Hall says.

Agents aren't antiquated

Web chat affirms that human interaction will continue to be a key part of the overall equation, from quote to claim. Although a Web chat can partially fulfill this need, many customers still want to communicate with an agent.

"There is a new generation of customers coming into the insurance-buying years and many are looking to interact in different ways," says New York Life's Battaglino. "The Web will be meaningful for them. But the Web will be more of an information-gathering place that will bring them eventually to the doorstep of the agent. This completes the picture."

Carriers have new ways to bring agents into the loop. Progressive, for example, recently upgraded its agent locator on its corporate Web site to make the application more intuitive. Consumers logging onto www.progressive.com can now access a larger volume of information about Progressive agents within the "Find An Agent" hyperlink, Alfred explains.

The upgraded technology will enable consumers to link to an agent's Web site-if they have one-and obtain the agent's e-mail address along with a detailed map to the office.

Carriers also are developing applications for agents that, although automation-driven, are not necessarily accessed via the public Internet, but from proprietary domains such as extranets and intranets.

Hartford, Conn.-based Travelers Insurance Co., for example, unveiled in January a browser-based program called Atlas3 for its personal lines independent agents. Storing policy statements in a paper-based environment takes up a great deal of inventory, requires manual filing and slows response time for policyholders seeking quick action from their agents and brokers. Atlas3 is seen as a solution to this problem.

Assisting Agents

Currently piloted by about 500 agents, Atlas3 builds on an existing agent program called Atlas2-a "green-screen" PC interface-and uses identical technology that Travelers introduced to small-business agents in 2000 with its Issue Express Net automation system.

Agents activate Atlas3 by logging into a secure area hosted by Web site servers but not accessed via the corporate site, www.travelers.com. Agents are issued a password and user name, which links them into the Atlas3 system. Atlas3 sits right on the agent's desktop, helping them grow their business profitably by making their customer service representatives more efficient, says Clyde Fitch, president of Travelers' personal lines business.

With Atlas3, underwriting and pricing is done automatically with pull-down screens that reduce the possibility of errors. In addition, since Atlas3 can be linked to comparative rating software, re-keying information is avoided.

Agents also can use Atlas3 to print ACORD applications and customer proposals and e-mail home declarations for a real estate closing. Agents can be trained on the system in a matter of hours, as opposed to Atlas2 which could take a few days.

The technology not only reduces redundancy, but it's intuitive as well, Fitch says. Pre-fill templates enable an agent to customize deductibles and limits within a policy. Based on data that an agent inputs, the system might recognize that the policy calls for a $500 deductible rather than $250. In turn, it would pre-fill all the data that would correspond to a $500-deductible policy, Fitch adds. Basically, technologies such as Atlas3 are the ones that Travelers will continue to pursue as it expands its electronic strategy.

"Middle-line automation is where we will continue to invest," Fitch says. "Many carriers invest in automation skewed toward the top line-emphasizing a lot of 'gee-whiz' stuff and cosmetic features on their Web site. But we have always focused on the middle line, which is using automation to create internal efficiencies with our agents."

The road to nowhere?

After a grace period from consumers, many insurance carriers have reached a crossroads in their Internet endeavors. Those who visualize the Web as a mechanism to support and expand their overall operations are on a road paved with promise.

But even these visionary carriers admit that the road to successful Web programs can be littered with potholes. Looking ahead, Forrester's Eyler says that carriers' Web sites must be more attractive to customers before the sites can expect to thrive at online policy acquisition.

"Demand for insurance online is actually outstripping supply," Eyler says. "Consumers want it, they have been placated about some security issues and now it's up to carriers to hold up their end of the bargain."

But perhaps more than acquisition, claims management will become a significant part of corporate Web expansion, Eyler says. A consumer may select a carrier's policy from a third-party Internet marketplace. However, when it comes time to settle a claim, they may visit the carrier's site. As a result, carriers must be prepared to respond.

Claims Support

For instance, Progressive has an affiliation with San Francisco-based CarStation.com. Using the provider's OnStation technology, Progressive offers a service that links claims adjusters, glass repair and collision shops and policyholders in a secure online setting. "While customer acquisition will not be scaled back, carriers will be earmarking a significant amount of capital to online claims-settlement," Eyler says.

Concentrating on claims is probably a wise course to take for another reason. On the sales end, carriers still have a long way to go. One serious misstep is handing over too much responsibility to technology experts to perform non-IT related tasks. As a result, rather than giving the marketing department a hands-on role in building an online sales program, the IT department is left to do it-with disastrous results, the Conning & Co. report states.

"There's a lot at stake and yet there's still a very cavalier attitude about the Web," Eyler says. "Many carriers have not understood that marketing is essential with a corporate Web site. They still view it as IT-centric. All of these issues will have to be addressed-sooner rather than later."

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