The rallying cry of everyone with a vested interest in the future of e-commerce is "Get on the web, or die". Brokers yet to make the move are under increasing pressure.
There's the credibility factor. No one wants to be left behind, but then do we really know where we are all going anyway? Is significant investment in systems that will allow existing policyholders to look at their policy details on-line, going to be worth it? Do we even know if that is what customers will actually want to do?
The next fundamental question to ask is exactly what brokers expect to achieve by going on-line?
It seems clear that sales is an area that could benefit enormously, but it is also apparent that merely putting up a web site will not be enough to match the plans of the big brands. Direct Line has already announced commitment towards e-commerce. The number of on-line quotations it is now issuing on directline.com is much higher than anticipated.
Justin Skinner, PR manager for e-commerce, says it has provided over 250,000 quotes in the five months since launch in September 1999, adding: "There have been ten million page impressions since then, and conversions are in line with our expectations; 40% of visitors to directline.com do so outside the hours of our call centre, which means the site is generating increased business to the Group."
Screentrade launched its motor insurance site, offering comparative quotations directly to the public, in October 1997. Home cover followed in September 1998 and travel one month later. Exposure was boosted last year by a high-profile advertising campaign.
Ivo Philips is director of the Screentrade site, and he confirms there are now over 600,000 users. "The conversion ratio has been increasing steadily, and is more than satisfactory," he says, adding that the ratio varies between one per cent and seven per cent depending on the product.
Its customer base largely consists of a South East bias towards a younger demographic group, with higher value cars, which Philips considers to be a very attractive proposition for insurers interested in higher premium business. Screentrade is operated by Misys Interactive Trading, in co-operation with Shaw Insurance Brokers. Both are part of Misys, the independent computer solutions group, which will launch an associated web site for mortgage and life-related products this year. Screentrade's site will be relaunched to coincide. Philips confirms contracts have been signed with Cable & Wireless and Telewest for digital TV applications, and others will follow.
Cox Insurance Holdings was one of the parties involved with Freeserve and GlobalNet in the launch of the Insurancewide.com service in December. This site plans to offer an extensive range of insurance products, from the company market as well as from the Lloyd's portfolio, which until now have not been directly available to the consumer. Editorial content is considered an important element of this site, to include topical information, market trends, and tips and advice for motorists and homeowners.
A word of caution
Big players like Direct Line and Screentrade will not stint in promoting their brand names within e-commerce. Any small to medium-sized broker trying to compete could find their web site suffering by comparison.
Yet amid all the hype and buzz about e-commerce, smaller brokers might be forgiven for believing they will be left behind if they do not act quickly. Jacquie Boast, sales and marketing director of New Millennium Technologies offers a word of caution. She believes brokers should pause and consider their aspirations towards e-commerce before jumping in lemming-like. She explains: "It's not going to be enough just to put a quote engine on the web. Or to post up a web page and leave it at that, like some modern equivalent of sticking a poster in the office window. Brokers should work out exactly how they expect to enhance their business via the web. Otherwise this could be a classic case of technology driving the business, rather than the other way around."
She believes that a dose of reality is needed in all the excitement about e-commerce, remembering that brokers usually have to handle the complete range of risk acceptances. "If you look closely at most of the popular web sites handling large volumes of business you find these are highly focused. Step outside their chosen risk parameters and you're back in the street. The acceptance is relatively narrow. That concept is of no use to brokers, unless they too want to focus on a chosen niche," says Boast.
Meanwhile, NMT's Premier Partnership initiative has been a long time coming, but Boast is confident that the extra wait will prove worthwhile in the long term. The importance of the world wide web has flourished since the inception of Premier Partnership, but such developments are already accounted for within the system. "Web enablement will be ready for users fairly quickly," she says.
One broking chain that has had an internet presence since 1994 is the franchise-based Coversure Insurance Services. Nigel Taylor, Coversure's internet developer warns other brokers that maintaining a profitable web site is not for the faint-hearted. "You must have 100% commitment to stand any chance of success," he says. "There is a constant need to refresh the site, and one way of doing this is to add additional helpful information. There may not be any immediate sale prospect, but the seeds may be sown."
Taylor cites the example where Coversure started providing winter sports information, such as piste conditions and travel updates, on their site even though it had never written a winter sports travel account."Slowly, but surely, the enquiries began to roll in, and now we have a significant portfolio," says Taylor. "These projects are extremely cost-effective because they require no quotation software."
Another intermediary in the forefront is Evesham Insurance Centre. Director Steve Arthington confirms there is more to the e-commerce decision than just putting up a web site. "There are definite opportunities to secure large volumes of enquiries, but you have to be geared up to deal with those quotes, otherwise the effort is wasted. When you consider the sums of money the larger players are investing, it would be foolish to assume it is going to be easy for the smaller intermediary. There are many factors to consider, " he says.
Important factors
"For instance, if brokers become liable for administration fees for consumer complaints, what happens if our on-line connection goes down for a few days and communication is lost temporarily? It would be a big mistake to think that going on-line is an answer in itself. It needs a thoroughly professional and detailed approach. Brokers have to rethink every aspect of their business first."
The extent to which brokers might venture into e-commerce is still uncertain. Customers of tomorrow will definitely suffer "choice fatigue". They will be aware of their needs, and know exactly what they want, but may not be prepared to spend the time finding it themselves. This could be brokers' chance to change from a product-based culture to a knowledge-based orientation. Now there's a niche!
