Debate Goes On Over Using The Internet For Distribution
By Ara C. Trembly
Two surveys done by industry analyst groups seem to agree that insurers see a bright future for the Internet in the industry, but the studies disagree when it comes to Internet sales and distribution of insurance products.
In a recent survey by Greenwich, Conn.-based IVANS, 75% of insurance companies polled said they regard their Web sites as sales vehicles for insurance. “We take that to mean everything from new customer acquisition and applications to referrals to agents,” explains Clare DeNicola, vice president, sales, for IVANS.
In contrast, however, when asked whether or not they view the Internet as a vehicle to sell insurance, 69% of companies who said they use independent agents to sell “either disagree or strongly disagree that Internet is a viable distribution model,” says DeNicola.
Among a smaller group of respondents who dont use independent agents (about 20% of the total sample), more than 50% either agree or strongly agree the Internet is a sales vehicle for selling policies, DeNicola adds.
In addition, while some companies in the IVANS survey said they considered their Web sites to be sales vehicles, “only about 15% of respondents are currently using the Internet as a distribution channel for insurance sales,” says IVANS.
The IVANS survey questioned 80 information technology (IT) executives from both life-health and property-casualty companies, notes DeNicola. Job titles of those surveyed include CIO, CTO, director of MIS, vice president of IT and director of IT.
According to DeNicola, the survey revealed that insurers are finding “practical” uses for the Internet. “They are being neither aggressive nor conservative [in utilizing the Internet], which is good news,” she notes. “If youre purely aggressive in adopting technology for technologys sake, it’s going to burn out.” A more moderate approach, she adds, lets insurers “adopt the best technology for that need.”
The IVANS survey also found that only 8.1% of respondents said they had no plans to replace their legacy systems, while 30.2% were rewriting their systems to be Web-based. The latter group, says DeNicola, is rewriting its systems on an application-by-application basis to run on smaller networked systems, rather than mainframe computers. “They will eventually dump their mainframes,” she says, adding 1.2% of respondents have already done so.
An additional 53.5% of respondents said they were implementing Web-based front ends for their existing legacy systems running on mainframes.
“Were in a very good place,” says DeNicola of the insurance industrys progress on technology, emphasizing what she calls the industrys “practical approach” and tendency to “evaluate the right things on an ROI basis.”
She characterizes the insurance industrys technology progress as “comparable” to banking and brokerage, indicating that “it could even go beyond that.
“Were probably still behind in [producing] flashy Internet sites, but were not looking at the Internet to be a sales vehicle.”