Insurers Shed e-Laggard Stereotype
Study shows insurance catching up to financial services peers in e-business effectiveness.
For the past few years commentators have criticized the insurance industry for lagging behind the e-commerce curve. Now that the economy has taken a turn for the worse, the industry gets left-handed complements for having at least avoided the consequences of diving in with the "irrational exuberance" of early adopters. But a new study from Andersen (Chicago) suggests that the insurance industry's current e-commerce fortunes are owing not only to chance, but to a healthy balance between caution and aggression.
Conducted through information gathered in April and May of this year, Andersen's second annual Financial Services eBusiness Effectiveness Diagnostic, titled "Today's eBusiness Mandate: Enhance Profitability Across the Enterprise," shows insurance making notable e-commerce effectiveness gains as compared to its financial services peers, including asset management, banking, brokerage and lending firms. The study—which measures companies' capabilities in sales and marketing, application taking, transaction processing and ongoing customer service—marks a 15 percentage point rise, to 41 percent in insurance e-business effectiveness.
While this only takes insurance out of dead last place-wise, it shows improvement on a par with banking and lending firms. Property/casualty segment sites scored an average of 51 percent—a figure comparable to that of the brokerage industry, the financial services e-commerce leader.
To measure insurance e-business effectiveness, Andersen studied 24 prominent insurance Web sites for usability, content and personalization, as well as checking call center and home office sources to gauge common customer experience, according to David Holtzman, partner, national insurance industry practice, Andersen. "The major change is that, while about a year ago everybody put up a site with mostly brochureware, and with some basic calculating capability, in the last year it's become more personalized," he says.
While Holtzman acknowledges that insurance companies got their timing right in the context of the dot-com bust, "at the same time they've been getting pushed pretty hard by customers. They've realized that the Internet is just a new channel, and that they have to look across the channel game and provide multi-channel service," he says.
The Processing Challenge
Despite insurance's e-commerce improvements, processing remains a critical issue. In fact, according to the Andersen study, "customer demand for instant product delivery and transaction execution remains largely unfulfilled by the majority of financial services."
"Insurance firms are still struggling with trying to get data from their legacy system up on the Internet to do the fulfillment process online," Holtzman says.
Only by such efforts will insurers meet the study's "mandate" of enhancing profitability across the enterprise, according to Holtzman. "Where insurers have benefited most in building e-solutions is on the cost-efficiency side in both profit enhancement and cost of service," he says. "From the revenue enhancement side it's been the acquisition of new customers, based on ease of Web site use. On the cost side, the companies that are doing it right have been able to streamline back-office processes," to create straight-through processing.
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
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