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Home, Life, Auto, Click: Insurers Vie for Web Customers

Isolated bare-bones sites have put insurers behind their competitors on the Web. To catch up and attract customers, insurers need to add features, secure screen space on high-traffic sites, and connect to offline channels.

(originally published by Booz & Company)

Insurance companies haven't kept up with Internet innovations or the online needs of their customers. Although some have succeeded in building site traffic with such basic tools as account-tracking, most insurers remain far behind banks and brokerages — many of which now market insurance on their Web sites.

The fourth-annual Booz-Allen & Hamilton eInsurance study surveyed top insurance carriers and financial institutions and intermediaries, reviewed 206 financial-services Web sites, and analyzed Internet usage data from Nielsen//NetRatings Inc. The survey found:

  • The top 10 insurance sites attracted only 5 million unique monthly visitors — far fewer than the top 10 brokerage sites, which attracted 10 million unique monthly visitors, and the top 10 banking sites, which attracted 18 million unique monthly visitors.

  • Visitors spent an average of only 13 minutes on insurance sites (those selling auto, homeowners, renters, and term life policies). This compares with an average of 22 minutes on bank sites and 36 minutes on brokerage sites.

  • Insurers like Nationwide Mutual Insurance Company and Prudential Insurance Company, whose Web sites offer a range of financial services, attracted about 3.2 monthly visits per person. But insurers whose Web sites focused exclusively on insurance attracted about 1.2 monthly visits per person.

In mid-2000, the top
10 insurance Web sites surveyed by Booz-Allen
& Hamilton attracted
5 million unique visitors monthly compared with
10 million for brokerage sites and 18 million for bank sites.
The Web is a natural channel for information-intensive businesses like financial services. Transactions are convenient, fast, and relatively secure, so it makes sense for insurers to enhance their online presence. However, because insurers hear from their policyholders only when major life events happen — births, new car purchases, illnesses, retirements — their challenge is to build the Web site traffic necessary to attract and retain customers. Otherwise they risk losing business to banks and brokerages, which interact with their customers far more regularly (weekly, daily, or even hourly) and can therefore get their marketing message in front of customers far more often.

As insurers attract more traffic to their sites, they will learn more about their customers' identities and needs. Insurers that integrate their sites with other channels (e.g., agents, call centers, branch offices) can effectively use that knowledge. By pooling information, the channels can create and share detailed profiles of customers — their policies, personal details, future needs, previous contacts with the company — that can be a valuable resource for sales and service agents anywhere. When a major life event hits, customers' needs can be met through the Web or other channels, building confidence in the insurer's products and service.

If high-transaction banks and brokerages can market insurance, why shouldn't insurance companies market other financial services?
Tips to Get More Clicks
Insurance sites have improved slowly since the first Booz-Allen eInsurance survey in 1997, when most sites were no more than online brochures listing agents and describing products. By 1999, 14 percent of the sites surveyed had some advanced features such as account-viewing and claims-tracking; that number rose to 43 percent in 2001. Interactive customer-specific features draw visitors, and alliances with other sites give insurance companies more visibility on the Web. The latest eInsurance survey found three strategies can help insurers thrive on the Web:

  • Give customers more reasons to visit your site. Fewer than 50 percent of insurance sites let consumers view their accounts online — a basic feature of banks and brokerage sites. Insurers should add account access as well as tools that let customers resolve problems, get quotes, and report and track claims. Room for improvement is ample, since huge gaps separate what customers expect from insurers and what they get. Whereas 86 percent of survey respondents said that customers want online transaction processing, fewer than 30 percent of insurance sites offer this service. Customer support is also lagging. In a test of 50 insurance sites, an embarrassing 54 percent did not respond to an e-mailed question within one day; an astonishing 28 percent did not respond at all.

  • Expand beyond your core products. If high-transaction banks and brokerages can market insurance, why shouldn't insurance companies market other financial services? Almost 20 percent of survey respondents have formed partnerships with other companies so they can add non-insurance products to their online offerings. For instance, Nationwide Mutual's site offers in-house mutual funds and group pensions, and Prudential's site markets investment and even real-estate services.

  • Ally with high-traffic financial sites. Cross-marketing can work both ways, and some insurers use alliances to grab virtual shelf space beyond their own sites. For example, American International Group auto insurance has a presence on the Wells Fargo & Company banking site. Companies like Wells Fargo want to increase their range of offerings by marketing 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. Insurers who find the right partners can find spots on sites run by banks, brokerages, account aggregators, and comparison-shopping marketplaces such as Insweb. The eInsurance survey revealed that 59 percent of the surveyed executives have formed partnerships to expand distribution. However, insurers with little alliance experience could find this approach challenging; only 30 percent of respondents said they have the skills needed to manage partnerships.

Increased site traffic does little good if customer data is not coordinated across channels. The first insurance companies to integrate internal systems with external channels will reap huge rewards.
Crossing the Channel
Increased site traffic does little good if Web-generated customer data cannot move to other channels, or if customers cannot easily speak directly with an agent or buy an annuity offline. Insurers need to integrate their internal systems and external channels so information flows across them. Internally, integration means that companies can collect and analyze all relevant customer details and share them among marketing, underwriting, and customer service departments. Externally, it means that customers will find that every company representative has the relevant details on hand during every contact.

But integration is hard. Only 15 percent of respondents said they can track a customer's activities across channels. A little more than half of the insurers have tied their Web sites into their back-office systems, a requirement for online sales and servicing.

To harmonize the Web with other channels, insurers should focus on three areas, in this order:

  • Customers. Find out what your customers want. They may prefer one channel over another for specific types of transactions, or for stages of a single transaction. This is typical behavior when people buy financial products. For instance, most customers for financial planning services want to start the relationship with an in-person meeting, whereas follow-up communication involves e-mail, phone, and face-to-face contacts, according to a 2000 Booz-Allen survey.

  • Profitability. Use the profit potential of customers to guide your decisions about how and when to offer particular features. Aim the most costly services at the customers with the greatest profit potential. For example, profitable customers, with several life insurance policies and mutual-fund investments, could be offered free in-person meetings with a financial planner. Less profitable customers, with a single life-insurance policy, may only be offered access to an online planning calculator.

  • Technology. Once you understand customers' needs and economic value, then tie together your current and developing IT systems so they work across divisions, alliances, products, and channels.

Insurers should bring their sites and systems in line with those of leading financial-services companies. The effort will pay off because the first companies to get integration right will reap huge financial rewards. Real integration may take five years to happen, but it is coming. Insurers who build and integrate useful sites will give visitors a reason to stop and stay, rather than move on to a more attractive destination.

The authors would like to acknowledge the participation of Giridhar Rao and Christina Casanova in this project.

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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