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A Matter of Respect

Study finds that insurers need to sharpen Web-based courtship.

According to a recent study, the insurance industry is not nurturing its relationship with online customers. The Summer 2004 Online Customer Respect Study by The Customer Respect Group (Bellevue, Wash.) concludes that 52 percent of the 74 Fortune 1000 insurance firms that were analyzed did not respond to all inquiries submitted to their Web sites (a 15 percent increase since February). Additionally, 60 percent (a 25 percent increase) indicated that they share customer data with affiliates, subsidiaries or business partners, although the identities of and relationships with these organizations was not determined.

The study was conducted by analysts posing as online customers of large insurers in four categories: life and health mutual, life and health stock, P&C mutual and P&C stock. Analysts used the Web sites, read the online privacy policies and submitted online test inquiries to each company. "To gain the confidence of the customers, the industry needs to learn to use the Web site as effectively as they do their agents and prospects," says Roger Fairchild, president of The Customer Respect Group.

One thing insurers can do to increase the trust of online customers is make their privacy policies more clear. "The survey found that in many cases carriers' privacy policies allowed for the sharing of personal data with third-party affiliates. This is most likely the result of legal and compliance personnel being overly cautious in order to allow for legitimate uses of such sharing," says Chad Hersh, senior analyst, insurance practice, Celent Communications (Boston). If a carrier sells mutual funds, for example, it might need to share account numbers or other personal data with the fund manager, he explains. "Insurers may need to share customer information in order to offer certain products, so adding a clear explanation to privacy policies may help put customers' minds at ease."

According to The Customer Respect Group, 20 percent of online users will abandon a Web site and go to a competitor's site if they have a less-than-satisfactory experience. Consequently, a user-friendly Web site could mean a boost in sales. "There could be a potential revenue increase for the insurance industry of between $20 million and $70 million per year," Fairchild says.

Overall, the insurance industry scored 5.7 out of 10; the group average for the diversified financial services industry was 6.3, according to Fairchild. "Responsiveness is very important to users, as is a sense of privacy," he says.

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