Deciphering the E-biz buzz

Rough Notes, May 2001 by Anderson, Steve, Ashenhurst, John, Engel, Phil, Lahm, Paul, Et al

Panel discusses tech-savvy consumers, agency-company technology, outsourcing, when the Internet is an appropriate solution for agents and when it isn't

Editor's note: The following comments are excerpts from the Indiana CPCU Insurance Day "insurance.com" panel discussion that took place in late February. This year's panel was cosponsored by The Rough Notes Company and pf enterprises, LLC, which provides insurance-specific consulting and training.

The panel moderator was Steve Anderson, a licensed independent agent for more than 20 years with experience and background in agency internal operations, marketing, management, and the effective use of technology. Panelists included John Ashenhurst, who, since 1975, has reported on and applied emerging technologies to the solution of insurance distribution problems; Phil Engel, who retired from CNA in 1999 after a 38-year career with the company and who has since become chairman of the board of InsureSEEK com., a Web-- based insurance broker; Paul Lahm, who leads the agency consulting, technical support services and associated programs for Westfield Services'Agency Connected Solutions group; Ann Nelson, who, with more than 20 years' experience in independent agencies, is manager of the agency outsourcing servicing department for Westfield Services; and Alan Symons, who is president and CEO of a major underwriter of nonstandard auto and crop insurance.

Steve: The independent agent is a key component to the insurance process, but carriers and other third-party companies continue to try to bypass the agent and create another distribution channel, using the Internet to quote, bind and issue policies. With technology making it easier for carriers to work around agents, why are agents still so important?

Customer service

Alan: Allstate is offering a variety of access modes, but they found that they need the local presence offered by the local agent. Instinctively we look for the "local" presence for help-even when we go into a department store, we look for someone to help us. At the grocery we're now able to check out our own groceries, yet there are still lines-people wanting to be served by someone else. By nature we seek out some kind of human touch and feel. So the agent has to be part of the process in a complicated business like insurance.

John: There are countless insurance companies, yet only a few have national recognition. What matters to consumers is the person in their local community whom they buy insurance from. That local presence should have stronger brand recognition than the companies it writes for. For all the companies to try to sell insurance via the Internet, there would be a tremendous amount of noise-they would be totally lost. The way that companies will continue to need to sell is through local representation.

What's more, having a local presence also provides consumers someone who is accountable.

Allstate has figured out the multi-- access system to provide for their customers. An Allstate customer can come in through the Internet, or the 24x7 call center, or call or visit his/her Allstate agent. All three access methods yield the same information, and the consumer isn't forced to do business one particular way. That's what independent agents and agency companies need to figure out how to do. This multi-access is part of the expectation of the service paradigm of the U.S.

Phil: The customer rules. Allstate figured that out. They could no longer afford to access only part of the market. They decided to go after all of it. They didn't assume that there was only one way to interact with customers. Organizations can't tell the customer how the customer will do business. Ultimately the customer is going to tell you how he/she wants to do business and if you respond to that, you'll find your market.

Steve: Assessing the value of various customer service capabilities was one of the objectives of the Addison Study conducted for the IIAA. One question asked how important 24x7 customer service is when consumers are making a purchase decision. (That doesn't mean providing a claims hotline or your home phone number on your business card.) Of the personal lines consumers responding, 87% said that level of access was important. Of the small business consumers ($10,000 in premium or under), 70% said it was important. However, only 34% of the agents surveyed believed it was important.

The disparity between what consumers are expecting us to deliver and what we think we should deliver is of critical importance.

Another important question was: "How important is it to consumers to have online access to their account information?" (Just knowing it's available-- not even doing anything with it.) The same three groups were surveyed. Some 59% of personal lines customers said it was important; and 47% of small business owners wanted that access. And what did agents think? Only 6% believed consumers would consider this important.

Things are changing. Consumer expectations of what good customer service is are different than what a lot of us think it is. We need to be very aware that it's not what we think consumers should be able to do, but it's responding to consumer expectations and providing a means for them to do that.