Internet could be salvation
Internet could be salvation
The insurance industry is always pathetically slow to adapt successfully and embrace the benefits of new technology. The internet has been no exception. Mr Portwood's letter (February 1) is testimony to the exploitation inflicted on intermediaries determined to follow the advice being offered from every quarter to connect to the internet before it's too late.
Why then have thousands of intermediaries managed to successfully forget nearly everything they know about marketing when embracing this new technology? We have been successfully trading on the internet since 1995 when we first launched a product for homeworkers that returned its investment in year one and has made a profit ever since. Our product for blocks of flats, Elevations, was the first of its kind and is offered on a wholesale basis to other intermediaries providing quotations online in real time (see midway.co.uk/flats). While this was an enormous investment, it does deliver high service standards with low operating costs.
So why have we been able to succeed where so many others have failed? The answers are painfully simple. Our first site for homeworkers was written at a time when this cover was still difficult to place and was targeted at the type of person that might be using the internet to conduct part of their business from home with a PC. In 1995 there were only about 17 entries in many of the search engines for household insurance, and our market research proved correct. We didn't overspend on the development – in fact the site is pretty dull, but it works.
So unless you have done your homework and have a product that can translate to the medium successfully then don't waste your money on a website.
That said, this is in fact a very exciting time in terms of the development of the internet for the insurance industry. Do get connected and do use the very powerful tools now at your disposal free of charge (other than the cost of being connected). Both the web and email can seriously reduce your operating costs if used correctly. Good business to business applications already exist and many more will be coming online.
The power of the web is unrivalled for the delivery of rule-based products to intermediaries. Quite simply it can allow the intermediary to access the rating book of an insurer's product in real time without having to tolerate waiting days or weeks
for faxed quotations or hours spent in call queuing systems.
Nearly every day my staff surprise me with ever more ingenious ways to harness this technology. Only today I watched a personal lines clerk obtain an exchange rate online to advise a client on a sum insured for a musical instrument bought in the States (while the client was on the telephone). Could your office provide that level of extra benefit to your clients?
Now that Mr Portland has quite rightly opened the can of worms it must be time for the industry to realise that as a business to business application the internet can truly be the intermediaries' salvation. This will only happen as and when intermediaries implement internet connectivity to their offices.
Midway Insurance Services
Simple and cheap route
After reading John Portwood's letter (Feb 1), I feel forced to comment. I agree with most of Mr Portwood's comments regarding the internet, but would like to point out that it doesn't have to be expensive.
First, I must stress that we sell insurance policies that are by no means mainstream
(i.e. motor or household). However, this does not mean that we do not have competitors.
Admittedly, the only people that seem to make money from the internet are those who advise. In order to avoid this unnecessary expense we simply didn't ask for their advice. The route we took was simple and cheap. I went out and bought a computer magazine which luckily, at the time, had the top 20 internet service providers (ISP) in it. I then went and bought a standard software package which tells you how to build you own website at £120. Then I built the website from the instructions in the box.
Some 18 months ago I did not know how to turn a PC off, and if I say so myself, our site is equal to most I have seen, if not better.
The other expenses involved were:
n about £400 registration fee with our ISP
n £80 per month with ISP to “host” our site.
Therefore, it wasn't too expensive to build a site and have a company host it for us.
It does take a little time to learn all the jargon and actually build the site, but it is worth it in the end.
We do not rely solely on the website to bring in our business, and frankly it doesn't bring in the majority of it. But lets face it, it didn't cost a great deal.
Find out the real benefits
John Portwood's letter of the week correctly identified a number of key issues for any insurance broker's ecommerce strategy.
Fortunately, the technology to provide consumers with a fully transactional engine allowing comparative quotes and the ability to buy online and receive instant documentation is available now. Policy adjustments and cancellations can also be made online by the customer.
Insurance brokers can also benefit by having full back-office functionality integrated with their public internet site. Consequently, customers can access their documents or quotes by going into the brokers internet site or the broker can also make the transaction for the customer over the phone.
The result is a combination of the benefits of traditional brokers, customer sales and service with the advantages of technology. Substantial cost savings, particularly in operational overheads, can be achieved for the broker. Using the internet as an additional source of income and providing brokers' customers with a full transaction engine increases the opportunity for higher sales per customer and higher renewal retention.
Substantial cost savings can also be achieved for insurers by using the technology – products can be created and distributed faster and considerably more cheaply than ever before. Insurers can also enjoy the benefits of receiving free data transfer. The result will be cheaper products for brokers.
Any broker considering an ecommerce strategy should be aware that the benefits of combining traditional customer service with an ecommerce strategy will, over a period of time, enable the broker to increase its customer base with more customer sales. But it is likely that the majority of those sales will be local.
John Portwood is correct in identifying that basic websites can not only be expensive but are of little value. It is only now that the technology is available that real benefits and real additional profits can be generated.
Quote and Buy
Never giving up
“If we were ever forced to trade on equal terms with all brokers, we would walk away from the General Insurance Standards Council (GISC).”
The above statement was made to yours truly by a senior insurance company executive over a drink and that is why I shall not breach the confidence of the occasion and reveal the identity of the person concerned – although I am sure his opposite numbers in all other UK insurance companies would make the same admission if called upon
to do so.
This brings me on nicely, to chapter II prohibitions under the provisions of the Competition Act 1998.
In my opinion, the GISC itself appears to be fundamentally infringing chapter II, in its rules, inter alia, by not having a level regulatory playing field.
One example of this is member firms for whom insurance is a secondary activity (and some of these do a hundred times more insurance business than many brokers) are not subjected to the same premium accounting/holding/handling requirements. This, clearly, places brokers at a competitive disadvantage.
I could go on and on – and, I often do for very good reason.
At present, the Institute of Insurance Brokers (IIB) is being called the renegade body, for not falling into line with the GISC.
All sensible brokers should thank heavens for the IIB because, if we did not exist, the other more pedestrian associations would have sold them down the Swanee by now, without proper thought, care or duty to their relevant constituencies.
Our track record speaks for itself. We will never give up until justice has been done, and has been seen to be done.
IIB director general.
We got no warning
How refreshing to read Ms Owsley's letter on 19 January. If only it were true.
We had a small but increasing account with MMA but it was cancelled without warning because we had not reached the target set for us.
Not that anyone had ever told us that we had a target to meet and notwithstanding the fact that we had that same day sent three house proposals through to them.Our EDI facility was terminated without further ado without warning. Even appeals by British Insurance Brokers' Association (Biba) were to no avail.
Since then we have taken over two other substantial brokerages and have been talking to a third that, co-incidentally, has a very substantial MMA account.
Would MMA restore our agency? Answer: “no”. Name and address withheld Cheap cover by law
Re: Chasing Criminals, January 11, 2001.
Since the state authorises and empowers insurance companies to sell motor insurance and the state requires motorists to buy it, then the minimum cover should be available at an affordable price.
Over the years, insurers have opted out of their obligation to provide cover for all and increasingly “cherry-pick” – aiming to restrict their portfolio to those least likely
to claim, such as the over-50s or retirees.
As a consequence, high risk groups such as young drivers, those with convictions and so on find that those insurers that will provide cover only do so at exorbitant premiums.
The age old insurance principle that “the premiums of the many pay the claims of the few” is therefore diluted to “the premiums of the fewer pay the claims of the few”, thus driving up premiums.
Cover required by law should be affordable and should by law be provided by all insurers at a flat premium.
This would at least remove one excuse of those who drive without cover.