While online sales of personal lines become increasingly common, there is still a perception that certain commercial lines pose a more difficult sell. Yet with an unofficial figure estimating the market for commercial lines running in the neighborhood of $80 billion, it’s no surprise that companies are looking to the Internet to grab a share of that market.
Currently, there are only a handful of players on the field for online sales of workers’ compensation coverage. The approaches taken are unique to each carrier, “all the way from people that are just dying to get something going on this, to insurance companies that really haven’t given this a whole heck of a lot of thought,” said Mark Benson, executive vice president of CyberComp. CyberComp, a unit of Reliance Group Holdings Inc., is an Internet-based writer of workers’ comp policies for small businesses.
However, whether a company uses a force of a dozen agents or an army of more than 1,000, the independent agent system forms an intrinsic part of this type of transaction.
“Our agents are our lifeblood with this thing,” Benson said, adding that CyberComp is solely dependent on the quality and accuracy of the information that goes into the system, and the best place to get that is through an agent. “In this process, the insurance agent…is as valuable, if not more valuable, than in an situation where you have underwriters involved…We don’t write a stick of business other than through an insurance agent and don’t plan to.”
Currently, CyberComp, which quoted and bound its first policy online in 1997, utilizes a force of 1,600 to 1,700 appointed agents. These agents can obtain access to CyberComp through a password-protected Web site. After logging on and completing the online application for a client, an expert system built into the computer determines a company’s eligibility for coverage. The agent can receive an underwriting response in a matter of minutes. Upon quote approval, the agent can then authorize binding of the policy online.
According to the company, gross premiums written jumped from $31.5 million in 1997, to $81 million in 1998, to $146 million in 1999.
Benson said one of the things that distinguishes CyberComp from the emerging competition is that in the 43 states in which CyberComp does business, not only is there the possibility to obtain quotes and bind policies onlineÐbut behind the scenes, a number of other online services are provided. These services include loss runs, loss control information, billing, cancellation and reinstatement.
Becky Adriaenssens, vice president of Kemper Insurance, whose eSource online underwriting provides agents with Internet access to Kemper’s HealthyReturn workers’ comp insurance, said that California represents a significant portion of the company’s business. “[California is] 10 percent of the comp premiums in the country,” she said.
Adriaenssens said that initially, there were some concerns because of recent underpricing and underperformance in the California marketplace. “But we’re finding, and it’s unfortunate that it has to happen because other carriers are struggling…that our prices are being able to be sold,” she said. “People are willing to pay a little more for an ÔA’-rated carrier…We’re in 44 states at this point. We’re in all the states that do workers’ comp.”
Similar to the CyberComp approach, Kemper built an underwriting template that underlies its Internet product and offers the opportunity to quote and bind online. Adriaenssens said the company does contracting, trucking, hospitality, the service industry, restaurantsÐjust about anything an agent would come across.
“We don’t do the really tough stuff, like a roofer or somebody that builds skyscrapers…mostly because that doesn’t lend itself to being template underwritten,” she noted. “You need a human being intervening, asking a lot of varied questions. And this has to be something that you can ask 10 questions or less.”
Jeffrey Behm described the approach used by the company, InsurePoint, an online joint venture of the Atlantic Mutual Companies and the California broker Bolton & Co. Behm is a co-founder of InsurePoint and the e-commerce manager for Atlantic Mutual. Currently operational in about 29 states, InsurePoint offers a variety of coverages, including workers’ comp. Again, the focus is on smaller companies-in fact, InsurePoint states that it offers workers’ comp even if it covers only one employee.
“We actually allow…the client, agent and the carrier to all work together on the transaction entirely online,” Behm said. “We do the entire transaction from beginning to end, including renewals, endorsements, updates, policy changes, etc., all over the Internet.” This is done by allowing either the client or an agent to fill out the online application. “[We] then give them a quote, usually within two business days,” Behm continued. “If they like the quote, they can come back in and bind it right on the site. Coverage is effective as soon as they bind online.”
Behm described two major contributions that agents make to the online transaction. “One is that we still rely on our agents to drive traffic to the site,” he explained. “The second function that they perform is when the client comes in and as they’re filling out the application and after they’ve filled out the application, the agent helps with advice about whether they’ve selected the right coverages, the right limits, the right deductible, all the rest of that.”
In fact, Behm stressed that the only way InsurePoint will sell coverages online is in partnership with an independent agent.
Adriaenssens agreed. “There’s a lot more to workers’ comp than just getting the premium and the bill,” she said. “Insureds have taken, I think, a little bit for granted what agents do for them, but agents keep them out of trouble. There are regulations they need to be following. The agent recommends when loss control is appropriate. The agent makes sure that the insured is answering the questions correctly so that when the information goes in they don’t get hit with a huge audit later.”
All three companies interviewed for this article said that response has ranged from very good to great.
“The first time I did this, it was harder to convince an agent that going to the Internet was the way to get something done,” Adriaenssens said. “It’s a lot less hard to convince them of that now…The response has been fantastic considering how little we’ve actually publicized it.
“We have, at least at this point, over 500 submissions through the Internet, which is phenomenal when you consider that it’s a pretty brand new product.”
However, keeping out in front of ever-evolving technology is essential.
“We’ve always got to reinvent ourselves,” Benson concluded. “We always have to be able to provide additional services. That’s where the competition’s good. I think ultimately this is going be one exciting part of the industry.”
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