By Doug Grant CIP, Principal, Insurance-Canada.ca
(as published in Alberta Broker, Dec 2001/Jan 2002 issue)
An excerpt from “e-Insurance – is it working?” published in
“Your Virtual Insurance”, issue 08-27-01.
“Even though the Web and new tech advances can reduce
administrative burdens, there is strong “push-back” within the industry. Agents
and brokers, for example, may perceive e-commerce as a step toward their eventual
elimination. Many insurers have been reluctant to allow customers to circumvent agents for
fear of alienating agents who stand to lose clients and commissions.
Instead of attempting to placate agents by missing their
own opportunities to become more competitive, insurers should educate agents on
technology’s advantages and offer incentives that encourage them to use these systems,
such as attractive commission structures for business placed online. Insurers should also
demonstrate to agents how the Internet can generate new leads and sources of business,
reducing the time spent on administration and allowing them to make more sales.
An insurance company most likely to win in today’s market
is one willing to invest in intelligent, Web-enabled technology for greatly improved
productivity and enhanced customer service.
For example, with more than 90 percent of agent-carrier
transactions handled by phone, fax and paper, policy administration is one of the most
promising front-end aspects of Internet insurance. Web-based administration will
dramatically cut policy costs while improving customer service and responsiveness,
providing 24-hour access to information.
Even as insurers expand their online activities, most
aren’t ready to accommodate real-time transactions, such as enabling customers to make
changes to their policies or to buy new ones. Eventually, the full scope of front-end
services must be offered, including the ability to rate, quote and bind policies online.”
Brokers, like every other business, have the same response
to change. Early adopters pursue new approaches while others defer their investments until
later. Greg Maciag in his column in National Underwriter P&C Edition, Sept. 17 issue,
refers to Tom Standage’s book “The Victorian Internet”, “which chronicles
the invention of the telegraph in the 19th century, and points to the similarities between
the telegraph and the Internet. And considering the fact that messages traveled by horse
and boats in those days, a telegraph network that was able to send messages across long
distances in minutes was indeed a revolution compared to what the Internet brings us
today. …. Many of the current issues such as privacy, security, crime, pornography, and
fraud are similar to a few of the past technological and social advances. … Perhaps the
most revealing point of Mr. Standage’s book is something we all can understand – that
people do not change as fast as technology. … Perhaps the first [lesson] is something
that I have heard Bill Gates of Microsoft say repeatedly – that we tend to overestimate
the short term, but underestimate the long term.”
Within the context of the state of the Internet in Canada,
the rate of Internet adoption by small business, and the nature of insurance product as a
“financial services” service, a good number of brokers have made significant
time and financial investments in the Internet and are finding advantages there. CMD
Insurance Brokers, as noted in last month’s column, is one of many such examples.
However the competition as in insurance direct writers are
moving along quickly too. Recent announcements include RBC Insurance (offering customers
online quotes on complete line of home and auto products), Clarica (launching online sale
of critical illness insurance), BELAIRdirect (offering unique flexibility for pre-existing
medical conditions for travel insurance), TD Bank, and others. Like Clarica, Allstate has
invested significantly in coordinating activity across multiple channels. The point being
that the competition is not presenting a standing target.
Much activity to leverage the broker channel is underway.
Many companies are rolling out over the web initial functions, or additional applications.
Chubb Insurance launched a new product, Innovator for Software – a Quote to Issuance
e-Commerce Insurance Solution to be used by brokers to service the software developer
industry. The examples are many.
Conceptually the CSIO activities could bring a broker CSR’s
service capability to the same level as a direct writer’s agent, but with the added
benefit of broker-delivered choice of markets. CSIO has announced the initial companies
who will pilot the CSIO Insurance Portal. Recently more insurers (Markham General, North
Waterloo Farmers Mutual and Lombard) have joined CSIO, but just as telling are the new
vendors joining. Such firms as Compu-Quote, OARBIC, and Iter8 all see business opportunity
in the CSIO Insurance Portal. Sherwood International will be the first vendor to test with
the CSIO Portal, using XML to enable real-time communication between brokers and insurers.
“The Internet Revolution is dead. Long live the
Internet Revolution. The technology that once promised to change everything is doing just
that, despite the recent failure of the dot-coms. That’s the chief finding of
“Digital Strategies Survey 2001,” a wide-ranging survey from DiamondCluster
International, Context magazine, and the Wharton School. Even as the dot-coms fade,
seventy percent of senior executives in the survey believe Internet technologies have
become either “important” or “essential” to their core business
success and that the positive effects are only now just beginning.
“The message is that Internet technology has
won,” said Chunka Mui, DiamondCluster chief innovation officer. “Take no comfort
from the death of dot-coms. What was once the tool of upstart revolutionaries is now a
weapon in your big competitors’ arsenals. Any company that doesn’t transform itself around
this technology will be left behind.”
Many executives felt that the bar will continue to rise,
predicting that the impact of the Internet will expand significantly over the next 24
months. Of those surveyed, 30% expect e-business initiatives to have a major impact on
reaching new customers and markets. Fully 46% said e-business projects will have a major
impact on customer service, and 48% said it would greatly affect corporate purchasing. On
average, respondents said 12% of sales will come via the Internet in two years, twice what
they said the Internet accounts for today.
How are your investments doing?
(Note: all announcements and articles referenced, and more,
can be see at Canada’s leading Internet Resource Centre www.insurance-canada.ca)