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Direct Auto Writers Top Traditional in Online Experience: Forrester

Though auto insurers haven't been in the game as long as some other financial services firms, online-first companies like Progressive and Geico have effectively implemented best practices, a Forrester study says.

The customer experience on Web sites for auto insurers who are dedicated to the online sales channel surpasses those of more traditional providers, according to a study released by Forrester Research.

The “2010 US Auto Insurance Secure Site Rankings” study, released last week, is based on a similar look at bank sites that Forrester has performed since 2006.

“It comes down to one thing: monoline or direct providers of these types of products vs. traditional providers,” says Brad Strothkamp, a Forrester analyst who worked on the report. “We see the same thing in the brokerage and banking businesses. The firms that live or die by the web get it right because they have to.”

Compared with the bank sites, Strothkamp continues, auto insurers often perform better on the customer experience side.

“You knew Geico and Progressive were going to be good at sales, but to see how good they were at servicing was surprising,” Strothkamp continues. “We’re now filtering their best practices back into banks because [the insurers are] doing so well.”

Progressive Insurance (Mayfield Village, Ohio) led the four companies studied with a score of 82 out of 100, edging out Chevy Chase, Md.-based Geico (79) and also beating Northbrook, Ill.-based Allstate (74) and Bloomington, Ill.-based State Farm (50).

“It’s our responsibility to listen to what [customers] want and make it as easy as possible for them to shop for, buy and manage their Progressive car insurance policy,” said John Kish, Progressive's senior director of systems experience, in an e-mail to Insurance & Technology. “A few things that were highlighted in the Forrester report, like our customized alerts, the option to select how and when to make a payment, our mobile web services, and our online claims service; are just a few ways we connect with our customers on a personal level.”

Forrester’s sample auto insurance customer was “Evan,” a Chicago advertising professional driving a 2002 Honda Accord. Through “Evan,” Forrester measured how well the four companies’ sites handled account opening, premium payments, claim filing and other customer experience metrics.

One of the main reasons auto insurers are so strong in this area is that they are fairly recent arrivals to the sector, Ellen Carney, another Forrester analyst, adds. The time spent waiting to see what established best practices helped these companies develop optimal customer experiences, she says.

“The insurance industry will never be accused of being a first mover. It will always want to see that that something is working before implementing it,” she explains. “There’s always a curiosity about benchmarking or best practices. What are the companies like me doing, and what’s happening outside my industry? Companies like Geico and Progressive are looking outside financial services to see how they can offer a strong customer experience.”

Another advantage auto insurers have is that their IT infrastructure isn’t as old as some other financial services sectors.

“A lot of firms with older technology spend time re-architecting things from 10 years ago,” Strothkamp notes. “If your infrastructure is only five to seven years old, you have to do less of that, and you can spend more of your incremental budget on creating a better customer experience or adding features and functions that consumers want.”

Because of this, auto insurers are in a good position to implement new Web site functionality, such as social media. Though there is some trepidation about the emerging channel, Carney says, Strothkamp sees it as a potential opportunity.

“It’s a little more difficult from a secured site perspective as to how that’s going to play out. For someone like Geico and Progressive, consumers have a good feeling about that firm. Progressive’s whole ad campaign is based around that. That just dovetails well with social media. I think they will naturally all pick it up because it’s to their advantage,” he says.”

Social media could be an opportunity to get consumers to take more advantage of the sites. Strothkamp notes that the only major shortcoming insurers had was in getting people to sign up for secured services such as e-statements.

“Banks and credit cards have done a good job of getting people to use a secured service — sign up for e-statements, etc.,” he says. “The insurance sector could learn from them.”

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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