ANALYSIS FROM GOMEZ: CHANGE-QUOTING SERVICES CAN DRIVE INTERNET CHANNEL ADOPTION

By Tim Carpenter, Gomez, Inc.

The Gomez Q1 2003 Internet Insurance Carrier Scorecard reveals that 88 percent of Scorecard firms currently offer the ability for policyholders to change a driver, vehicle, address or coverage level/deductible via the online channel. Yet only 38 percent of carriers offer the ability to receive a quote regarding how that change would affect the policyholder's premium.

Far fewer firms adequately message the availability of change-quoting functionality. Variations by carrier in the adoption of self-service facilities will increasingly depend on the extent to which they are able to provide contextual informational necessary to facilitate transactions.

Here's a look at the best practices in deploying coverage change-quoting functionality in the online insurance space:

COMMUNICATING THE VALUE OF CHANGE—Geico is one carrier that offers a broad suite of coverage change and change-quoting functionality. Policyholders receive quotes on how the addition or removal of drivers or vehicles to their policies, changing addresses or altering coverage levels will affect their premiums. Clients can then transact online using these quotes.

The value of this feature is two-fold. First, online policyholders are extremely hesitant to make blind transactions without knowing the financial implications. Geico gets around this by providing information in a context that facilitates action.

Second, coverage change-quoting provides an opportunity to highlight streamlined change functionality in a consequence-free environment. Online users are reluctant to test-drive change functionality when they are not yet ready to transact (especially via the online channel). Geico's change-quoting functionality stands out because the carrier provides contextual information reflecting the impact change will have on the customer's premium (the result of tight systems integration between the firm's online presence and its back-end policy management system).

Furthermore, after successfully completing the quote (which is essentially a dry-run of the change) policyholders recognize the convenience (a fast, simple process) of online policy change, which does not require the re-entry of personal/policy information the carrier already has on file. This positive experience will spill over, creating positive impressions relative to making changes online.

TYING AGENTS INTO THE PROCESS—Coverage change-quoting functionality is significantly more prevalent among direct sellers. Of Scorecard carriers from the traditional agent-affiliated community, only Prudential and State Farm offer online coverage change-quoting. Prudential is still building out the availability of this functionality, while State Farm only currently enables change quotes for coverage level and deductible changes. Larger traditional carriers, however, often make the mistake of equating change-quoting functionality with instantaneous end-to-end endorsements that cut out the agent.

Interestingly, most conventional carriers already offer online policy change functionality. Change-quoting is about expectation setting and barrier reduction that transforms the Internet into a more cost-effective and convenient transactional channel. It need not be instantaneous or independent of the agent to be effective.

State Farm effectively messages the involvement of the agent in the policy quote and change process, regardless of channel. The carrier messages that all changes are reviewed by the agent. It also clearly states that change is not immediate upon submission.

State Farm, however, could improve this by more actively reinforcing the agent's role. For instance, the carrier already integrates agent information and photograph in the secure area. It could tie the agent's image, name or personalized message to a change request, hence bolstering confidence that a user's action online will indeed make it to the agent's desk. Messaging could also explain the value of agent review of change requests.

Furthermore, State Farm could better set expectations for follow-up before the point of submission to encourage submission of change requests.

PROMOTING THE SOLUTION BEFORE THE TRANSACTION—Online policy change and change-quoting functionality is in its infancy. Most notable is the counter-intuitive manner in which most coverage change functionality is deployed and made accessible.

With the exception of direct sellers Progressive, Geico and USAA, carriers have yet to actively promote change-quoting as a solution. Most often, as is the case with State Farm, a policyholder does not even learn that a quote is available until it appears at the very end of a change request form. To drive usage of existing online change functionality, carriers need to make policyholders aware of and comfortable with this functionality. Even if they are aware that they will receive pricing before submitting a request, many are hesitant to proceed toward a request because they are unready to transact and associate a change request (to get the quote) with making a change.

Progressive promotes its change-quoting feature (separate from change requests) directly on the first page upon log-in and appropriately positions the service as a solution. Policyholders are told they can see the effect a change would have on their specific premium without making any changes. The secure area then becomes relevant not only when policyholders need to check their coverage or make a premium payment but when they need to make a variety of decisions which require context.

Policy change-quoting, if positioned correctly, has the potential to contribute towards two outcomes most insurers offering online access desperately desire: more frequent return visits and an expanded policyholder perception of the secure site's usefulness. By improving communication of key information preceding a transaction, influencing policyholders to log in more frequently and increasing clients' comfort with making coverage changes online, carriers will begin to witness the Internet channel returns their brethren throughout the financial services industry are already experiencing.

Tim Carpenter is an online insurance industry analyst with Gomez, Inc., a Waltham, MA-based Internet benchmarking and advisory services firm, www.gomez.com.