Understanding the Online Customer

When evaluating the insurance industry's online efforts, it helps to be specific. While Web sites dedicated to auto insurance are considered among the best of any industry, life insurance sites perform poorly in cross-industry comparisons -- a distinction they share with financial services sites in general -- according to industry reports.

Among the reasons some automobile insurance Web sites are successful is that they understand how consumers make decisions about their products, according to Brad Strothkamp, a San Francisco-based analyst with Forrester Research and author of the recent report, "Ten Ways to Build a Better Financial Services Sales Site." "Smart firms make sure that they provide the right content and tools for consumers to research their products online," he says. "If they want to apply online, great; but if not, the site will make it easy for them to transition to another channel."

Automobile insurers have some of the most advanced sites of any financial services vertical, Strothkamp adds. As for the rest of the industry, he observes, "I could count on one hand the number of traditional firms that have figured out the Web."

The exceptions are companies that do not have brick-and-mortar operations, Strothkamp continues. But unlike companies that sink or swim online, most life insurers and other financial services firms have to overcome channel conflict, as well as legacy thinking, he points out. "The majority of their business comes from field representatives or branch locations, so they haven't fully understood the online opportunity because they are so focused on how business is traditionally run," Strothkamp says.

A recent Customer Respect Group study, which found that life insurance sites perform poorly compared to those of other industries, suggests that carriers are applying a vestigial relationship model that is not suitable for the interaction dynamics of the online channel, according to Terry Golesworthy, president of the Boston-based research and consulting firm. "The industry continues to regard Web sites as a lead-generation tool for agents, whereas online customers look for Web sites to help them choose between products and companies," he asserts.

The study involved an evaluation of 50 insurers' Web sites by Customer Respect Group analysts, based on approximately 150 criteria developed via user polls and other sources. Those criteria are organized within three major categories -- site usability, communication and trust, according to Golesworthy. The findings are compiled in what the firm refers to as the Customer Respect Index (CRI). Out of a possible 10, the life insurance industry's overall CRI was 5.1, compared to a cross-industry average of 5.8.

"The dilemma for insurance is that companies have a range of products that are difficult to understand and often interrelated, and so one has to be careful about doing simple quotes [online]," Golesworthy adds. "Insurance companies need to balance between their efforts to educate and allowing the consumer to control the dialogue."

Shining Examples

Despite the industry's overall poor performance, several carriers scored above the cross-industry average in the Customer Respect Group study. One insurer, Minneapolis-based Thrivent Financial for Lutherans ($67.5 billion in assets under management), achieved the researcher's standard for Excellent Customer Respect. Thrivent's site, www.thrivent.com, is distinguished for usability characteristics, such as adaptability for the visually impaired, according to Golesworthy, who adds that the site's openness with regard to privacy-related considerations is even more important. "They are very clear that they don't track data and reuse it," he says.

Thrivent's success corresponds to a commitment to online excellence, exemplified by usability improvements and enhancements to its privacy policy made over the past year, relates Becky Bestul, Thrivent's director for Web site solutions. "Thrivent has long felt that the online channel is important," she says, "and we continue to look at ways to improve it."

Thrivent's affinity-group orientation is a major factor in the carrier's online commitment, which includes noninsurance-related services and communications capabilities, according to Bestul. "We have a whole online community for our market, which is Lutherans," she says. Thrivent's Lutherans Online Web site, she adds, "is an opportunity for members to connect not only with Thrivent but with each other."

Privacy Focus

Second-ranking company Pacific Life (Newport Beach, Calif.; $87 billion in assets) distinguished itself for its security practices -- which ranked higher than Thrivent's -- including the use of 128-bit encryption of its contact form. "We clearly state what our privacy policy is, and we tell people not to put personally identifiable information or personal financial information into an e-mail," explains Chris Janowiak, corporate Internet strategist, Pacific Life. "We make sure that privacy is as heavily guarded as possible."

The carrier's long-standing philosophy has been to be the easiest insurance company with which to do business online, according to Janowiak, who notes that Pacific Life has a Web committee that meets regularly to reassess its performance and set goals, such as being the fastest industry Web site. "We constantly meet to strategize and brainstorm on how we can improve our Web site," he says.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio