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Third Quarter 2001 / Issue 24 (originally published by Booz & Company)

Insurers: How to Win the Web Finance Wars

Insurers hear from their policyholders when major life events happen — births, illnesses, new houses, new cars, retirements. Banks and brokerages, by contrast, interact with customers far more frequently. As a result, bankers and brokers — many of whom now sell insurance — are getting their marketing messages in front of customers more often than are insurers. How can executives in a low-transaction industry such as insurance raise Web site visibility and win back customers when high-transaction competitors have greater access to them?

Internet statistics show how far insurers trail other financial-services providers in visibility. According to the fourth-annual Booz-Allen & Hamilton eInsurance survey, in mid-2000 the top 10 insurance sites attracted 5 million unique monthly visitors — far fewer than the 10 million and 18 million for the top 10 brokerage and banking sites, respectively. The report, which included Web site tracking by Nielsen//NetRatings Inc., also showed that visitors spent an average of 13 minutes on insurance sites, compared with 22 minutes on bank sites and 36 minutes on brokerage sites.

Insurers should be concerned because other financial institutions are adding insurance to their product portfolios — 300 banks entered the market in 2000. Without a useful Web presence, insurers risk frustrating customers who go online to do research, get price quotes, and track claims, but then cannot meet those goals. These customers may be receptive to competing offers when they visit a bank branch or log on to their brokerage account.

The eInsurance survey suggested three strategies for insurers to get in the game:

  • Give customers more reasons to visit your site. Upgrade your Web site with the features needed to manage policies. Survey respondents conceded they are not delivering what customers expect in such areas as problem resolution, online account access, and access to service reps. Insurers plan to add these and other tools, but huge gaps remain between what they offer and what customers want. Although 91 percent of respondents said that customers want online account views, fewer than 50 percent of insurance sites offer this service. Customer support is also lagging. In a test of 50 insurance sites, more than half did not respond to an e-mailed question within one day; 28 percent did not respond at all — performance well below leading financial players’ performance. Merrill Lynch & Company Inc., in contrast, responded in one hour.
  • Expand beyond your core products. If high-transaction competitors can market your product, consider expanding your product line to match their value proposition. Open space on your site to mutual funds and credit cards from other companies. For instance, Nationwide Mutual Insurance Company offers 401(k) services and group pensions, and Prudential Insurance Company’s Web site markets insurance, investment, and even real-estate services. Almost 20 percent of the survey respondents have formed partnerships to add non-insurance products from other companies.
  • Ally with high-traffic financial sites. Alliances can put insurers on sites run by banks, brokerages, account aggregators, and comparison-shopping marketplaces such as InsWeb. These companies want to market insurance, but they don’t want to own and operate an insurance company. Hence, an alliance to distribute another company’s products appeals to them. Wells Fargo & Company, for example, offers auto insurance from American International Group. Insurers like the approach, too; 59 percent of executive respondents have formed partnerships to expand distribution. For example, State Farm Insurance sponsors parts of Yahoo’s finance section. However, insurers without alliance experience could find this approach challenging — only 30 percent of respondents said they have the skills needed to manage partnerships well.

Our study suggests these strategies work. An analysis of 100 insurance carriers found that feature-rich sites from Allstate, Geico, Nationwide, and Progressive were leaders in both innovation and site traffic. Furthermore, sites of Nationwide and Prudential — companies marketing many financial products — attracted three times the number of monthly per-person visits generated by sites focused on insurance. With more tools and more products, low-transaction companies can start attracting more traffic.

Gil Irwin,
Gil Irwin is a vice president with Booz-Allen & Hamilton's Health and Insurance Group. He specializes in the management and strategic use of information technology within the financial-services industry. His clients include large organizations using IT as part of transformational change.

Paul Lockmiller,
Paul Lockmiller is a principal with Booz-Allen & Hamilton's Health and Insurance Group. He specializes in e-business strategy and implementation for insurance companies and other financial-services clients.

Larry Altman,
Larry Altman is a vice president with Booz-Allen & Hamilton's Health and Insurance Group. He focuses on developing business strategies for insurance clients, helping them drive growth through improved distribution performance, stronger marketing capabilities, entry into new markets, acquisitions, and joint ventures.
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