E-enabling Agents to Compete.

The most significant opportunity for insurers today is to help their agents interact electronically with carriers and customers.

While much of the Internet hype to date has been about selling insurance directly to consumers online via players such as InsWeb, QuoteSmith, Yahoo Finance or Quicken Insurance, the real action is about enabling agents to be more efficient and effective by operating through the online environment.

Forecasts for generating offline sales from online customer interaction are at least double those of fully completed online sales for even the least complicated insurance products. The agency system has the opportunity to support those online customers who buy offline. The real opportunity for insurers is to enhance how agents interact with customers by providing higher value-added advisory services while lowering the cost of transactional, informational and administrative activities via online mechanisms. There is always an "agent" involved in selling insurance. Over the past 20 years, the issue has been whether that agent has been independent, captive or direct via mail or phone. The challenge then became whether the agent was a bank, securities broker or traditional insurance agent. The issue today is largely around the contact forum: person-to-person, mail, telephone via call center, or Internet via e-mail, live chat from a contact center or even online streaming video of a live agent.

Insurers are using more multiple-distribution systems that leverage each of these approaches either independently or on a linked basis. The most significant opportunity over the next three to five years clearly is e-enabling current agency systems to more effectively serve their customers and interact with their carriers via electronic means.

More agents are moving online; about 10% have a Web site. Among the larger agencies and brokers, about 70% have their own Web sites. Many insurers also have put agency locators on their company sites and are beginning to interact with their agents via extranets or the Internet. The more innovative players tend to be the new e-enabling players such as Channelpoint (an online agent/insurer facilitator), InsLogic (an e-surance business marketer and processor), Ebix (an online agent marketplace) and Pivotal (e-surance fulfillment).

QuickQuote, an online aggregator recently acquired by ING, is another interesting player. It supports "cyber-agents" by providing online life insurance comparison and quoting capabilities while acting as the managing general agent. Traditional agency service-support firms also are moving into the online environment. For example, Ascensus has its AgencyWorks subsidiary and an alliance with eSuranceGroup.com, which provides agents with instantaneous, online, NAIC-compliant illustrations for variable life insurance.

The critical factors for insurers as they e-enable their agents to revolve around electronic customer-marketing services include:

* hosting agents' Web sites to encourage their activities online;

* providing online marketing support for agents to serve their customers, with services such as e-mail marketing, e-mail response services, live chat and call centers;

* identifying new sources of potential customers for agents via the Internet,

including portal/site linkages, online affinity programs and marketing campaigns;

* providing online cross-selling programs for agents' existing customer bases;

* providing e-business insurance coverages for agents to offer to their clients; and

* enabling single-entry, multiple-company interfaces (SEMCI) for easier submissions.

Insurance companies also should pursue online approaches to operational support for their agents. They include providing online quoting, illustrations, policy issuance, customer-service administrative support and claims information.

Insurers also should move from agent locators to agency links and online transfer via live chat and computer/telephony integration. In addition, they should provide compliance-support mechanisms and support agents' customer database management and use.

Insurers need to inform and train agents on what is happening online. There is a great deal of hype and little accurate information on current Internet trends and interesting players for agents to rely upon in making their decisions. Agents are talented small-business owners who know how to serve customers and make money while doing that. The place to make money today is online.

The real issue is not whether insurers should e-enable agents, but what their priorities are and how well and fast they can deliver those online capabilities to remain competitive along with their agency system.

Steven Landberg beads the insurance business for Nextera Interactive, an e-commerce consulting firm.