CARRIERS’ ONLINE EFFORTS FOCUSED ON AUTO SECTOR, E-SERVICING

By Tim Carpenter, Gomez, Inc.

Insurance carriers are making their Web offerings more conducive to conducting auto-related business while, extending self-service capabilities to retain more online-savvy policyholders, according to Gomez, Inc.'s latest Scorecard research. The reason: that's where the market opportunities lie. In fact, Gomez consumer market research shows that three to four times as many general Web users seek out information online related to auto insurance when compared with life insurance or homeowners information.

As consumer demand for online servicing continues to grow and carriers retreat from visions of high growth via direct online purchasing, insurers have focused largely on fine tuning their marketing pitches and building out effective online policy management interfaces. Gomez research also indicates that online auto insurance users are far more likely to attempt online self-service tasks than online life insurance users, (they are more than twice as likely to have accessed personal records and history, updated personal and policy information or made a premium payment online).

Though lagging other financial services sectors, recent and planned online technology enhancements by carriers indicate an up-tick in Internet channel initiatives to build customer relationships that facilitate additional self-service, which not only reduces operating costs, but also engenders increased loyalty.

The vast majority of technology enhancements recently or soon to be rolled out by multi-line carriers is focused on P&C policy access and servicing. The gap between investments in and the depth of online servicing functionality offered by multi-product carriers for auto versus that of other product types has shown few signs of closing.

A number of carriers have been busy fine-tuning and adding to their public and secure sites since the previous Scorecard. For example:

* The public site of Electric Insurance underwent a redesign in November 2002, where rollover navigation was introduced and situational awareness was improved.

* KemperDIRECT recently rolled out online document imaging of its declarations pages and policy contracts in the 18 states where it offers online access.

* Liberty Mutual recently rolled out a password-protected site for online billing and payment functionality (the carrier previously denied clients secure access to policy information).

* Nationwide rolled out a redesigned public site in December that more accurately represents its various product lines and offers improved page load times.

* Progressive, which won its seventh consecutive Gomez Insurance Carrier Scorecard, has recently enabled online purchasing of RV insurance and provides PDF images of coverage cards, while improving its quote and secure site demos (and continues to improve its public site via personalization).

* Lastly, State Farm redesigned its public site last May and has increased its online application and binding capabilities from one to seven states (although it reduced quoting by eight states).

The insurance industry is beginning to harness online technology to further customer relationships to which other financial services industry verticals have already availed themselves. Most important, traditional carriers such as State Farm, Nationwide and Allstate are beginning to offer servicing functionality that competes with traditional direct sellers, such as Progressive.

Looking forward, the challenge for traditional carriers is to increase availability of servicing functionality and to present customer data in a manner that intuitively drives behavior of its users. There is much improvement to be had in the implementation of technology currently offered. Furthermore, carriers have long avoided addressing serious navigational issues within their secure sites that are far less common in the banking and brokerage industries.

An increased focus resides in e-servicing within the auto sector. Life remains an online laggard due to the product's complexity. Insurance carriers will for the foreseeable future continue to focus on manageable components: namely servicing within P&C. As secure policy management areas continue to take shape across all lines, carriers will increasingly look to fit these platforms into the agent's business objectives—such that they will be promoted to the extent necessary to drive cost savings and added efficiencies.

Tim Carpenter is a research analyst specializing in the insurance sector at Gomez, Inc., a Waltham, MA-based Internet quality measurement firm. For more information, visit www.gomez.com.