Online Innovation Playing Catchup

How does the public perceive property and casualty insurers? Bill Conklin, a 30-year old native of Toronto says, “[of insurance companies] they love me when they’re trying to sell me something but as soon as they insure me, it’s a whole new ball game. All of a sudden I’m a nuisance. Anytime you want to find out something about your policy, it takes time and aggravation. Changing a policy is even worse. And heaven forbid you should actually make a claim.”

Various public studies across Canada have provided very similar attitudes from insureds. Insurers and brokers have traditionally been known for their superb sales process, but they are also known for the way their attention to customer service tends to drop dramatically after the sale — almost to the point of being offensive, according to customers like Conklin.

Encouraging your employees to show that they care, and providing them the tools to do so, goes a long way to solving this problem. Internet World-Wide-Web, commonly known as “web technology”, can help insurers meet increasingly sophisticated client demands and improve client relations, however, the insurance industry has been slow to adopt these technologies.

Slow evolution

In January 1999, eMarketer, an e-business research firm, published a report on the state of insurance online. Their findings revealed that while insurers were some of the first companies to have an online presence, they were actually some of the slowest to develop “real customer services and competitive e-commerce offerings.”

Two years later, another study, this one by Mercer Management Consulting, revealed that not much has changed. Insurers were still considered “slow movers” who were being far outpaced in online customer service by financial service giants like Merrill Lynch and Charles Schwab. The report concluded that companies like Merrill Lynch were succeeding where insurers did not because they offered customers large amounts of information and product choice through the Internet.

It is now 2002, and has the insurance industry picked up the pace in the area of customer service development? The answer is that many insurers have started down the road, but for most there is still a very long way to go.

Benchmarks set

In the financial services industry, banks and trust companies are leading the way in setting the benchmarks for customer service. At most bank websites, you can view your account information, pay bills, transfer funds, apply for loans and mortgages, and more.

In other words, you can perform many of the transactions that in the past you might have needed to call or make an in-person visit to do. Many also offer a download feature that creates a file users can then import into personal financial management software, such as “Quicken”. The banks have successfully integrated the web into their customer service network. Few insurers have reached this level of sophistication. Commonly, there are four steps of online evolution, the phases that most companies go through as they build their Web service.

The web brochure. At the most basic level, corporate Internet presence is little more than a directory listing with some information about the company and what it does, almost like an enhanced Yellow Pages listing. Most companies achieved this level five years ago or more, in the early years of the World-Wide-Web.

The internet storefront. At this stage, we see corporate websites evolve as a result of growing awareness about the power of an Internet location. This level of service offers the customer a great deal of detailed and useful information about products and services.

Preferences and portfolio services. Personalization is the key to the third level of customer service features. This might include a password-protected account where customers can view their personal information and a history of transactions. It can be as simple as allowing each customer to create web pages that deal only with the products and services they are interested in. It might also involve a complex system of tracking customer behavior that can be used to subtly tailor page content or develop marketing programs.

Internet commerce. At the highest level of online service, the company offers sales and service transactions similar to those a customer might perform in a face-to-face encounter with a sales representative. Many banks have evolved their services to the fourth level. Their customers are becoming increasingly familiar and comfortable with the concept of researching, buying, and using financial products and services online. The banks are, in fact, training customers to expect that these services will be available.

Canadian trailblazers

Customer demand for sophisticated Internet service will only increase with time. Not only are current users expecting more and more transactional features, but a whole new generation of web-savvy users is maturing into a prime target market for insurance and other financial products. Forrester Research predicts that 16-22 year olds will change the face of the on-line financial industry in much the same way they have triggered revolutions in the music industry with file-sharing applications such as “Napster”. Already, one-third of this age group does online banking, and they are four times more likely than adults to apply for financial products online.

Unfortunately, many insurers are stalled at the second level of web evolution, while customers are tapping their feet with impatience for them to reach levels three and four. In the U.S., insurers are making greater strides towards web service than in Canada but there is a handful of innovators we can look to here.

Allstate Canada is one of the trailblazers, following in the footsteps of its U.S. parent, which was ranked number-one by eMarketer in 2001 for providing the best online insurance experience. As with all effective Internet site services, the Allstate Canada site is the result of long and careful planning. “In 1997, Allstate Canada had neither a website nor a call center,” says George Hill, vice president of sales for Allstate Canada. “At that time, we sat down to develop our business strategy with an eye to what customers needed. They told us they wanted competent, caring, professional advice regardless of access point.”

A visit to the Allstate Canada site shows a clean and simple interface with direct links to areas where customers can file a claim, change a policy, make a payment or find an agent. The site also has detailed information on each product with helpful tools and calculators.

“Our objective was to provide access anytime, anywhere, by any means the client wished,” Hill says. “We wanted to make the service access points interchangeable. For example, one client might want to review information on the Web and then buy from their agent. Another client might want to perform the whole transaction online. We wanted customers to have the choice.”

The “choice” factor

What is critical about the Internet site service is that it addresses many of a customer’s demands, such as responsiveness, access to information, and a choice of how to interact with their service provider.

Web service is not a stand-alone proposition. Even though an insurer may offer all of the same functionality online as it does elsewhere, it cannot abandon its other points of access. Instead, all the components, from a call center to physical locations, must be carefully integrated. Such integration offers customer service staff the ability to contribute effectively to the customer service experience, and ultimately experience greater job satisfaction. “At Allstate, we created the ‘Good Hands Network’, which is a network of service points comprised of individual agents across the country, a call center with certified staff, and a website,” says Hill. “We understood early on that customers wanted both an agent network and the support of e-commerce.”

To start this process at your company, take a look at your company’s strategic plan. Does it address a network of customer access points with the web as a lynchpin? Does it include planni ng that will get you to the established industry benchmarks, and continuous improvement to maintain that edge? If not, your continuing ability to serve your clients competitively, gain market share and provide more services to your existing customers may be seriously compromised.