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Insurance Technology: Then and Now

Bill Kenealy September 2007

WHETHER ON PAPER OR ONLINE, TEN YEARS LATER, THE PERSONAL TOUCH STILL MATTERS

Sometimes a decade doesn't make all that much of a difference. Such, it seems, is the case with using Web-based technology to customize the customer's buying experience. In INN's inaugural issue, an article by Kit Ladwig, "Online Quoting Services; Hype or Happening?" took measure of the state of Web-based insurance quotes and sales. It found much excitement about the potential of Web-enabled quotes and sales, tempered by a good deal of pragmatism about its limits and speed of adoption.

Today, despite a decade of technical advances and consumers' increasing familiarity with the Web, research shows a small percentage of consumers completing insurance sales using only the Web. Indeed, a couple of new research reports serve to buttress Ladwig's contention that the adoption of online services would be glacial.

A July research note from Cambridge, Mass.-based Forrester Research Inc. paints a grim view of the state of online quotes and sales. Titled, "U.S. Auto Insurers' Slow Merge Onto the Information Superhighway," it states that in 2006, online applications accounted for only 5% of total auto insurance applications.

Likewise, a July report from Boston-based Celent LLC, "Online Insurance Sales and Marketing: What's Happening and What's Next," finds Web-based adoption also in the mid-single digits. Worse still, it says online auto numbers are comparatively robust when held up against the health and life insurance segments. The Celent study notes that several auto insurers, including Warren, N.J.-based Chubb Group of Insurance Companies, Webster, Mass.-based Commerce Group Inc. and Columbus, Ohio-based State Auto Insurance, do not offer online quotes.

Tellingly, the research shows that the resistance has not come from the notoriously conservative insurance industry, but rather from their Web-savvy, yet still reticent customers. While many are willing to research insurance online, many are hesitant to consummate the deal online.

Celent is only slightly more sanguine when it comes to the future of insurance sales, expecting that "pure" online sales will double by 2011, but still account for less than 15% of sales. Put another way, in 2011, despite the seismic shifts in Internet technology and cultural acceptance, and serious investments of time and capital by insurers, Celent foresees a vast majority of consumers purchasing insurance in much the same manner they did in 1997, or 1987.

Today, as evident in the Mutual of Omaha story (cover), having the technology and flexibility to personalize proposals for individual prospects seems to be having a winning effect.

IN 1997, EXECUTIVE DECISIONS TAKE ON DIFFERENT APPROACHES

In INN's first issue, a trio of stories of addressed different aspects of how technology enables executive decisions.

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