By Tim Carpenter, Gomez, Inc.
Insurance carriers continue to identify agent fear over Internet channel cannibalization as the primary obstacle to rolling out self-service functionality. However, in the banking and brokerage industries, advanced self-service requests and document imaging are creating cost savings via reduced call center, paper handling and mailing costs.
Few insurance carriers are capitalizing significantly on this trend. For instance, our recent "Internet Insurance Carrier Scorecard" revealed that all four direct carriers -- Esurance, Geico, GMAC and Progressive -- offer the ability to make endorsement requests online and are the only Scorecard insurers that offer digitally imaged policy documents.
Meanwhile, among the 13 Scorecard carriers that generate the bulk of their P&C business through agents, just 31 percent offer online endorsement requests. None present policy documents online. Considering that the Insurance Carrier Scorecard represents the leading online functionality offered by the P&C insurance industry, it's evident that agent-affiliated carriers are not cashing in on this opportunity.
Agent-affiliated carriers must develop a strategy to incrementally embrace cost-savings, such as those presented by self-service requests and document imaging, while maintaining a supportive relationship with their producers. Here are two suggestions:
1. Bring the Agents On-Board.Agents have little reason, currently, to believe the online channel can support them. Aside from agent location tools, there is minimal mention of agents on carrier Web sites. Before carriers can roll out greater transactional and document rendering functionality they must first promote the agent as a crucial component of the online insurance relationship. This step will change agent perceptions of the online channel.
Progressive, a carrier with significantly fewer agent conflict issues relative to the pack, does this by integrating its agent locator tool within the online quote-and-application process, presenting an unsolicited and customized list of local agents (based on ZIP code) who can help. State Farm, meanwhile, offers an "Agent Information" area that includes the agent's picture and contact information. This approach should be adopted and implemented along the lines of the model used by many full-service securities brokerages, with agent information presented throughout the site (rather than siloed).
2. Incorporate Agent in Service-Request Process. Once agents have been brought on board, carriers must implement self-service and document imaging functionality in a way that reduces costs and administrative strain, while not jeopardizing the agent/policyholder relationship. In addition to promoting the agent throughout the public and secure areas (through pictures and contact information), self-service functionality can reference the agent and create the perception that he or she plays a role in processing requests. By including the agent's likeness in the service-request area and including messaging that suggests that requests are being submitted to the agent, policyholders will see the agent as a significant part of the relationship.
The request can be routed and processed via the carrier's back-end systems, while agents are automatically notified that the policyholder has serviced his or her policy. Agents can keep track of high-priority policyholders and follow up with them ("I took care of your request and wanted to discuss ... "), while choosing to avoid personal follow-up with policyholders they deem less profitable.
In fact, research conducted for Gomez's report "Advisors Muscle-In Online: Integrating the Advisor in the Online Relationship" has shown that 40 percent of Registered Investment Advisors have noticed an ability to manage more business when clients perform more administrative tasks online. This model of self-service breeds convenience for the policyholder, and solidifies relationships and generates incremental business for agents, not to mention providing cost-savings opportunities to carriers.
Certainly, insurance carriers are in a precarious situation with respect to balancing consumer demand, business objectives, implementation costs and agent demands. To provide an online offering that delivers cost-saving functionality, carriers need to gain agent approval.
This begins with increasing the level of online respect they show agents. As agents own the relationship, carriers will need agents to actively promote the online channel to policyholders to drive adoption of these services sufficient to create cost savings. Operational cost reductions will only come once agents see the online channel as a positive influence on their relationships and workflow.
Tim Carpenter is a research analyst at Gomez, Inc., an Internet quality measurement firm in Waltham, MA. Please send any comments or feedback to [email protected].