Digital distribution

It seems that everyone is jumping on the wireless bandwagon. From cell phones to PDAs to wireless pagers, both professionals and consumers are seeking new, more efficient means of communication. The fast-paced growth of wireless technology in other industries hints at the tremendous potential benefits these solutions may hold for insurance.With wireless technology, agents can have a continuous connection to their information resources, management staff can monitor business from any location, or instantly respond to time-sensitive communications, and clients can look forward to faster response times. That means support issues that once took 24 hours and two or three phone calls can now be resolved in a matter of minutes via wireless e-mail.

As banking companies from coast to coast buy agencies to get into the property/casualty insurance business, Fifth Third Bancorp, for one, is getting out.In late December, the Cincinnati-based regional banking company announced it agreed to sell its property/casualty insurance operation to Hub International Ltd., an insurance agency based in Chicago, for an undisclosed amount of cash.

Back in the prehistoric 1990s, The Hartford Financial Services Group applied technology the old-fashioned way. It used a vertically oriented approach to solve problems in discreet business silos.Today, the $15-billion investment and insurance company is taking an enterprisewide viewpoint when it applies information technology. This new approach ties together disparate information technology offerings, simplifies some of the complexity of e-business and makes it easier for distributors to sell and service The Hartford's insurance products.

Over the past year, The Hartford Financial Services Group has launched several technology initiatives aimed at making life easier for distributors. Those efforts will continue this year as new features and functionality are added to The Hartford's eService and eSales programs.Last year, the company introduced the industry's first premium audit search tool available to agents through the Internet. This online tool augments the company's policy, billing and claims service capabilities available to agents through its Electronic Business Center (EBC), a secure Web extranet built exclusively for independent agents that represent The Hartford. Using this tool, agents can use the Internet to quickly determine the outcome of a commercial customer's audit and the reasons for any premium adjustment.

The insurance industry has made great strides in recent years in transacting insurance electronically. Yet there is no doubt that the barriers that still exist, whether real or perceived, must be toppled to allow insurers to join other industries in the pursuit of technological advances that provide greater choices and better service.State insurance regulators have taken the lead in addressing the barriers to electronic transactions. In the last few years, clarifications regarding electronic transactions were reviewed and guidelines issued with the release of a model bulletin by the National Association of Insurance Commissioners (NAIC). The NAIC model stated that electronic transactions should be treated no differently than paper transactions.

Annuities have been a mainstay product in banks since the 1980s, and over time, many providers have tried to push into the crowded channel. Has it gotten too crowded?Given the litany of failed bank-channel programs-Sage Life and Massachusetts Mutual Life come to mind-that litter the annuity battlefield, the answer looks like yes.

When insurance carriers talk about an insurance-sellingprogram designed around "bricks and clicks," it usually implies that services are offered both offline and online.While this remains the primary application, Baltimore-based Zurich North America Small Business has taken the concept in a different direction. Through development of its Buildersrisk.com Web site, the global insurance giant provides "clicks" that literally insure "bricks."

Unlike many other insurance contracts, annuities are marked by significant fluidity where accounts change daily, weekly and monthly. When an accountholder makes a change, the service provider must be prepared to hold up their end of the bargain.This isn't always easy. A report commissioned by Edison, N.J.-based NaviSys Inc. states that "many potential customers fear the loss of control of their money as an immediate annuity essentially locks up those assets for the rest of their lives."

Industry analysts predict that small-business owners will spend more than $40 billion on commercial insurance this year-as much as one-third of the total commercial insurance market. Most of this lucrative business is going to a few captive carriers, leaving independent agents and their carriers to divvy up the rest.Yet, consumer studies indicate that small-business customers want a broad choice of products from multiple carriers-something they can't get from a captive agent. What's preventing the independent agency system from snatching such a blatant opportunity?

The life insurance industry recognizes the Internet will be a valuable tool to help it compete in the future. But there is still a long road to travel before life carriers can become true e-businesses.That's the conclusion of a recent study conducted by the American Council of Life Insurers, Washington, D.C. The study, "Life Insurance and Electronic Commerce: Present and Future," examines several key issues related to the Internet, such as electronic signatures and cyber security. The focus was primarily on insurer-to-consumer initiatives.

As the property/casualty industry continues to get hammered by financial losses stemming from rising claims costs and deteriorating margins, Allstate Corp. is realizing that the best growth opportunity lies in the financial services arm, whose main products are life insurance and investment products."The financial industry is growing faster as an industry, so there's more of an opportunity to grow that slice of the business," says Edward M. Liddy, chairman and chief executive officer of the Northbrook, Ill.-based company.

The Web-based design of Kemper's Compete integrated marketing program enables agents to use it from any computer. Once at the site, an agent can choose the prospecting or customer contact campaigns that support their sales objectives, including retention of their most profitable customers.A Kemper agent accesses the Compete program through the Kemper's Auto and Home's agent portal, at www.IFGwork source.com. The agent then views the profiles of the agency's customers on the screen.

Technology upgrades are often characterized by cautious experimentation and taking relative baby steps-especially among insurers.National Grange Mutual Insurance Co. (also known as Main Street America Group) has certainly weathered its fair share of technology trends. Founded in 1923, the Keene, N.H.-based company has established a portfolio worth more than $500 million in premium through its network of 1,100 independent agents. The property and casualty insurer serves the East Coast from Maine to Florida.

Despite many advances in agency automation over the last few years, insurance agents are frustrated with many aspects of the technology designed to make their lives easier. This is a conclusion of a survey conducted early this year by the ACORD User Groups Information Exchange (AUGIE).Nearly 9,000 agents and customer service representatives participated in the survey. And, according to the results, not only are agencies burdened by keeping their agency management systems updated, agents also are irritated by the chore of duplicate data entry and the costs and training issues associated dealing with carriers' proprietary systems.

Most insurance agents will admit that flood insurance isn't an easy sell. Property owners, both individual and commercial, are often aware that their policy covers fire damage, but most don't realize that it doesn't cover flood or mudslide damage.Rarely do these parties investigate the prospects of securing a flood insurance policy, which can cause disastrous ramifications because most floods don't qualify for federal disaster aid. Only floods declared national disasters by the president qualify for federal assistance, which comes in the form of a grant or a federal loan that must be paid back with interest.

Mark Guthrie is flying high-personally and professionally. In April, he completed his first solo flight on a small airplane, and he was selected to replace Hussein Enan as CEO of InsWeb Corp., effective July 1, 2002.Transforming the Gold River, Calif.-based online insurance distributor into a profitable enterprise will require all the skill and determination Guthrie can muster.

When Blue Cross Blue Shield of Massachusetts embarked on its customer relationship management (CRM) initiative four years ago, the Boston-based health insurer could find no other healthcare organization to use as a benchmark.Today, insurers thinking about implementing CRM would do well to examine Blue Cross Blue Shield of Massachusetts as a model for what can be accomplished with a customer-focused business strategy supported by sophisticated CRM technology.

With 2.4 million members, Blue Cross Blue Shield of Massachusetts has avoided the common errors of implementing customer relationship management (CRM).First and foremost, senior management decided in 1998 that the Boston-based company would adopt an enterprisewide, client-centric business strategy, which it calls Concierge Service Delivery.

The market for supplemental disability income insurance is relatively untapped. Indeed, more than 80% percent of U.S. workers either have no long-term disability coverage or coverage they feel is inadequate, according to a recent study from the Consumer Federation of America and the American Council of Life Insurers.And, a 1997 study by the Life Insurance Marketing and Research Association (LIMRA) concludes that less than half of small-business employers (10 to 49 employees) offer any kind of disability income insurance to their workers.

Insurance companies, banks and brokerage firms are actively competing for new business on each other's turf. But financial services convergence in a true sense is progressing at a tortoise-like pace: slow and cautious.When Citicorp acquired Travelers in 1998-forming Citigroup, one of the world's largest financial services institutions-many analysts hailed the union of the insurance and banking entities as the beginning of a revolution in the financial services industry.