P/C Insurers’ Web Efforts Lacking Strategy

February 22, 2001

A new Conning & Co. study reports that the majority of property/casualty insurers did not have a guiding Internet strategy when developing their web sites and only a few insurers use the Internet effectively to reinforce their existing corporate strategies.

The study finds that insurers have achieved many technological capabilities on the web, yet most insurer web sites fail to give consumers a compelling reason to use them. According to Conning & Co.’s latest study, “The Internet and Property – Casualty Insurance: Lost in Cyberspace,” the competitive pressures within the industry to be online and be there quickly, has resulted in a number of strategic disconnects that have impaired and will likely continue to impair insurers’ Internet efforts.

The Conning study assessed the functionality of 44 leading primary personal lines and commercial lines insurers and well-known aggregates, as well as several smaller insurers that are heavily focused on Internet sales. Web site findings include some successes (agent locators), and failures (lead generations, online quotes) as well as functions that are impractical (online claims filing in the personal lines.)

However, the Conning study finds that the true value of the Internet will not come from specific technical applications, but from a company’s ability to effectively integrate, via the web, its marketing, operations and communications.

“The companies that use the web successfully will not succeed because they have some secret key to the Internet,” said Clint Harris, vice president at Conning. “Rather, they will succeed because they have a sound business strategy, a solid model with a viable value proposition, insightful leadership and the right people to execute their strategies. The Internet itself will be incidental.”

The Conning study notes that initially insurers believed that the Internet would be a major source of new sales. But, in reality, online sales have accounted for only about 1% of today’s personal line property-casualty premium. Part of the problem was a failure on the part of many insurers to recognize where their business was likely to come from and to design products and systems that would tap into that market.

It has not been uncommon for insurers with strong agency networks, for example, to spend heavily on systems which provided direct-to-consumer on-line applications. They learned that building it and driving an audience to it were two different things. Additionally, many insurers ignored what is emerging as the true value of the Internet. It is unprecedented as a source of support for customer service, distribution channels, and as a vehicle for streamlining business processes and transactions, both internal and external.

The study found that the chief reason for these oversights was that insurers’ Internet initiatives were being led by technologists, not experienced insurance business leaders. The Conning study recognizes four distinct groups of insurance entities who currently use the Internet. They are pure agencies, aggregators, “cyber agencies,” and traditional insurers.

Ultimately, it is likely that only a few companies will dominate the online insurance sales channel. However, the Internet probably will not save any company’s business model and it will not, by itself, destroy any company’s business model.

Conning identifies three essential principles companies must follow for setting successful website strategies. The Conning study, “The Internet and Property – Casualty Insurance: Lost in Cyberspace” is available from Conning & Company for $575 by calling toll free 888/707-1177 or 860/520-1245 or can be purchased through the company’s web site at www.conning.com

http://www.conning.com . A complete listing of all Conning Strategic Studies can also be found by visiting the site.

Was this article valuable?

Here are more articles you may enjoy.