Peripatetic Rep: Center of the Web

When I walked into the golf club’s dining room, the first people I saw were my two broker friends, Bob and Stan. Bob Davies was co-partner in a successful midtown brokerage which placed a lot of business with our insurance company. Stan was a broker in a town of some 30,000 an hour outside the city. As my company’s senior marketing representative I was in regular touch with them both.

“Greetings!” I said. “Are you in a buying mood?” Although it was late March, winter still had a firm grip on the countryside, and the golf course was wearing a thick blanket of snow. The golf club was staging its annual pre-season equipment sale — always a popular event. In addition to racks of new golf clubs, the room was also filled with used clubs that members were trying to sell: everything from high-tech drivers and fairway metal woods to steel and graphite-shafted irons, plus dozens of putters in every possible length and style.

As were admiring a handsome matched set of three slightly-used wedges, the tall figure of my boss, Fred Wilson, came striding across the room. Fred — who was manager of our company’s downtown branch office — was carrying a stack of boxed golf balls in his arms. He beckoned us over to one of the tables around the room and as we dropped into the chairs, he set a box of balls in front of each of us. “A small pre-season gift from our generous company,” he said cheerfully. “Although the way you fellows play the game I suspect they’ll be gone in the first week.”

Bob Davies looked at his box and whistled softly. “My, my! New XLS Distance balls. State-of-the-art technology. Nice to see you company types do something right!” At that moment a steward brought over a large pot of coffee, set mugs in front of us, and filled them up. I looked across the table at Bob Davies. I was aware that he was involved in our company’s new program to make expanded use of web-based technology.

“Speaking of advanced technology,” I said. “Have you made any headway in creating your website?” Bob smiled. “Dave, I knew when I agreed to be part of this pilot project that I had to first create my own website. I just never realized how complicated this whole process can be…”

“Give me a for instance,” I interjected. “Okay, ” Bob replied, “first, a website has to be visually attractive. The flash page needs good graphics, clean typography, strong colors. In other words, it has to look professional and efficient. Its job is to present important information in simple, direct and easy-to-understand terms. Then it has to be simple for the customer to use the ‘prompts’. In other words, by following a logical pathway our customers can learn the information that is critical to them, and can browse their way through any other pages on the site quickly and simply.” He shook his head, “it’s easy to say, but tough to do”.

Fred Wilson interjected, “didn’t we offer you the services of our website designer?” Bob nodded, “oh, yes, and it was tempting, with independent website designers charging anywhere from $3,500 to $5,000 to create a ready-to-run site”. He shook his head. “My partner and I decided not to accept your kind offer. I guess we felt our website might look too much like all the other ones your inhouse specialist has put together.”

“You aren’t doing it yourselves, are you?” I asked. “Oh, no!” Bob said emphatically. “My partner is the electronic whiz in our office. He took a couple of courses in web design and writing markup language. But after thirteen or fourteen hours of work, he’d succeeded only in putting most of the flash page together — minus the hot buttons.” He grinned, “that’s when we called in an outside expert. He’ll configure the active bits and pieces for a couple of thousand dollars.”

At the other side of the table, Stan cleared his throat. “Hey, I’m impressed with all this high-tech labor you guys are putting in. But I have to ask the question: where is this going to lead us all? Isn’t there a danger of us all trying to run before we’ve learned how to walk in this new Internet world?” Before Bob could answer, my boss cut in smoothly. “I take it, Stan,” he said cheerfully, “that you’re not overwhelmed by the possibilities of a web-based environment for independent brokers?”

Stan shrugged. “Hey…I don’t want to rain on anyone’s parade. I’m just expressing my personal view here.” As I started to speak, he held up his right hand. “Don’t get me wrong, guys. I think that web-based functions are well established in our industry, they’re a factor of our lives now, they’re going to grow, and they can benefit the insurance buyer. Fast, on-line quotations have proved that already.” He sighed. “I just happen to think we brokers could waste a colossal amount of time and money chasing a rainbow that doesn’t exist.”

Bob Davies raised his coffee mug in his friend’s direction. “I’m a bit more optimistic than you, Stan, about this whole web-based system. But you know, I don’t think we really have a choice. We either have to understand it and find what it can do for us, or run the risk of being left behind.”

Fred coughed gently and leaned forward. “I don’t think any of us feel there’s a pot of gold in web-based functions, Stan. But we have to be realistic: there are two economic facts driving the insurance business to web-based functions: costs and competition. First, e-business offers the hope of cutting insurance transaction costs, and secondly, those newcomers in our field, like the banks, are integrating web-based tools into their competitive offerings. We can’t ignore that…”

“And isn’t there another point here?” I interjected. “There’s a whole generation out there who grew up with computers. They learned how to use them as kids and in school. They expect to use them to communicate, to inform, to educate, to entertain themselves, and to supply some of the goods and services they need, or want.” As I expected, it was my boss who jumped into the debate. “Let’s go back in time a little way,” Fred said with a quick smile. “Remember how this whole e-business movement began? We started with the easy part: software applications that simplified the whole inquiry process for insurance buyers. Comparative rate quotes for auto or property were suddenly available on-line to anyone. To me, the great aspect of that particular innovation was that one of the great mysteries of our business was solved: auto insurance prices and home insurance prices were all out in the open. There was nothing hidden any more, our customers could see price comparisons in black and white, clear and direct.”

“It was a big step forward all right,” Bob Davies agreed. “And the good news was it didn’t cause a stampede of customers anxious to buy from the lowest price company that showed up on the rate comparison chart. I like to think my customers stayed with me because they feel I do a pretty good job for them.”

There was a moment’s silence around the table, then Stan spoke again. “Okay, I’m with you so far.” Then he gave us one of his patented grins. “Since I seem to be playing devil’s advocate here today,” he said, “I might as well continue.” He looked around the table. “Okay…there’s one nasty little thought that keeps popping into my head any time the question of e-business comes up: it looks tailor-made for the direct sales approach, at least for the personal lines of insurance. The pressure on companies to match the lower costs of competitors will be too much for some of them. They’ll simply drop the axe on us and that’ll be it: the end of the line for brokers.” He swirled his coffee around in his mug and gave us a quick grin. “There! Is that argumentative enough for you?”

I could see that my boss was ready with an answer, but I jumped into the fray. “Stan, I’ve heard the concerns of a lot of brokers on this very topic.” I shook my head. “But all the research I’ve seen shows that insurance buyers prefer the security of having a broker look after their individual needs.” Fred added, “that’s true, Dave, the most recent study I have shows that over 80% of all personal and auto insurance flows through brokers, whether they’re independe nt or captive agents. I really don’t see the introduction of web-based functions as a way for companies to start trying to squeeze brokers out of the process. Quite the contrary, in fact. It’s the obvious way for us to keep you in the picture because our customers tell us they want you there.” He frowned and scratched his ear for a second. “Frankly, I think a lot of us, not just brokers, are concerned over the next steps in a web-based world. But let’s not forget that our critics say the independent broker-company network has duplication of effort which adds to the overall cost of insurance. Our partnership on the web can help us to combat that criticism.”

As he finished speaking, a waiter arrived with a fresh pot of coffee. As he completed filling up our mugs, Stan spoke up once more. “Right, men, here’s another question, and I guess this one is directed at you, my friend.” He looked over at Bob Davies. “Do you really think that people will start hitting your website as soon as you go online?” He shook his head. “What are you going to promise that everyone else out there isn’t already promising?”

Bob Davies smiled back at his broker friend. “I’ll tell you in a second, but let me first give you a little background.” He took a quick sip of his coffee. “A few years ago, I was convinced that the Internet was going to be my official enemy. I looked on it as the almost-perfect direct marketing tool. A customer would beam up the Internet, select the company of his choice, and buy a policy online without ever coming in contact with a broker.” He shook his head. “I never gave a moment’s thought to creating our own website, because I wasn’t sure where most insurers stood on this whole new technology.”

A bowl of potato chips was delivered to our table, and after we helped ourselves, Bob Davies carried on. “These days, I see the Internet and web-based functions a little differently. Together, they can make it possible for me to offer a value-added service to my customers. Stan, you asked me what my website can promise that everyone else isn’t already promising. Well, if I do this right…then quite a lot, really. I should be able to offer comparative rates to my customers online. My customers could get access to information on their insurance coverages, the status of their account with us, even the details of any claims they may have had. All this online, twenty-four-hours-a-day, seven days a week, three hundred and sixty-five days a year. If that doesn’t represent value-added service, I don’t know what is!”

As Bob finished, Fred Wilson leaned forward in his chair. “There’s no doubt about it, this whole web business is a learning curve for us all. In the early months of the Internet, everyone expected online sales to boom. It just never happened. And that has changed the focus away from business-to-consumer to business-to-business…”

“Didn’t I see a recent consultants’ study which shows that insurance companies are now seeing the Internet as a vehicle to assist current distribution channels, rather than a way of creating a separate distribution system?” I added. That brought a nod from my boss. “Yes, Dave, I saw that report. It made the point that using Internet capability this way not only avoids conflict with existing sales networks, it’s also a heck of a lot less expensive!”

As Fred Wilson finished speaking, Stan lifted up the new metal 5-wood he had bought at the sale. “Speaking of expensive,” he said, “this new weapon had better be good come spring, or I’ll hold you all responsible!” I hoisted the graphite-shafted driver I had bought, plus my box of golf balls, and got to my feet. “Seems to me there’s an analogy between insurance via the Internet and all this new high-tech golf gear. Both are expected to get the job done better and more effectively.”

Bob Davies laughed. “Right! One promises to save strokes; the other one to save money.” It was Fred Wilson who held up his right hand in a cautionary gesture as we reached the entrance. “Let’s just say,” he said, pushing open the door, “that the jury is still out on both counts”.