ANALYSIS FROM GOMEZ: CARRIERS ACCELERATE INTO SITE ENHANCEMENT FAST LANE

Analysis of the Gomez Q3 2003 Internet Carrier Scorecard reveals an increased pace of site enhancements by many carriers, with more to come in the future, which could pose a stiff challenge to Progressive's continued dominance (eight consecutive number-one finishes).

Here's a look at the key trends that surfaced during the recently completed review period:

MOVERS AND SHAKERS:
While Progressive remains atop the Scorecard, the gap has been closed significantly. For instance, the firm no longer holds the top spot in the Auto E-Servicer profile. Part of this results from its lack of immediate online access after online enrollment to core secure site functionality such as policy viewing, policy changing and claims status checking.

With the recent enhancement of USAA's second layer of authentication, Progressive becomes one of two firms on the Scorecard that make online enrollers wait up to a week for access to their policy information. This becomes increasingly important as later-stage adopters of the online channel desire to come online.

Allstate continues to plug away at a wide variety of smaller initiatives that contribute strongly to its leap from number four to number two on the Scorecard. To its credit, Allstate has simplified much of its public site, resulting in better situational awareness and accessibility to key services ((i.e., quoting, registration and log-in is only one-click from the home page). It also launched account access to its life policies, rolled out unique Web sites for its 13,000 agents and integrated a follow-up request within its quote form that underlies a new agent/call-center referral program, which has been extremely successful in converting prospects.

Among the major carriers, enhancement activities were similarly brisk. Like Allstate, Nationwide (number three) now enables agent follow-up within the quote and State Farm (number six) is slowly increasing the number of states in which it quotes and binds online. Finally, AIG Direct (number 16) has added online policy-viewing capabilities.

Another carrier, Amica (number 11), has made enrollment for online access immediate and significantly improved navigation of its log-in process and secure site. Meanwhile, Electric Insurance (number 16) now enables online payments, and Safeco (number 13) has removed the delayed second layer of enrollment authentication.

CHANGING OF THE GUARD:
A change in our methodology relative to inclusion of affinity carriers has resulted in the addition of The Harford's AARP P&C, MetLife Group Auto & Home, and USAA to the rankings. All three are very competitive, particularly USAA, which finished fourth. Additionally, we added 21st Century Insurance. Although 21st Century only issues policies in a few West Coast states, it remains competitive in terms of the percentage of the U.S. population it serves. Moreover, the carrier has an advanced online offering that more than met our minimum criteria.

Further, a bevy of new criteria were added to the Scorecard, providing greater granularity around storing and editing payment info, profile management, enrollment for automatic payment plans, stand-alone "What If?" tools, availability of online quotes and enrollment via offline channels. This also altered the universe of carriers that qualified for our Q3 ranking.

Meanwhile, GE Auto Insurance and Prudential Insurance have been dropped from the Scorecard following both firms' move to sell their personal P&C lines of business. Amid all these machinations, the Q3 2003 Internet Carrier Scorecard grew to 18 firms from the 16 evaluated in Q1.

FOLLOWING THE LEADERS:
Many of the top traditional and the middle-of-the-field direct players are chipping away at critical online functionality, closing the gap on the leaders.

As in most financial services industries, insurance carriers have been adding functionality with minimal attention being paid to usability, messaging and the user experience. For insurance carriers to take the next steps toward a more successful customer experience, firms must focus on improving task flows around functionality currently offered.

Going forward, the extent to which communication between policyholder and carrier or agent is facilitated via the online channel, and the degree to which online functionality eases ongoing service interactions, will be followed even more closely.

A bevy of internal research from carriers shows the profound effect online quoting is having on offline sales channels. The extent to which firms streamline processes and provide better hand-offs to call centers and agents in the future will play a pivotal role in the future development of the online channel.

Tim Carpenter is an analyst who follows the online insurance sector at Gomez, Inc., an Internet benchmarking and improvement strategies firm in Waltham, Mass. Additional Q3 Internet Insurance Carrier Scorecard details can be found at www.gomez.com/main.aspx?m=5&s=2&tc=90.