Power of the People.

The Internet has become an electronic soapbox for unhappy policyholders to voice complaints. Some insurers are monitoring the Web and reacting.

Mary from New York is steamed, because her auto rates increased after she filed a claim. In Indiana, Joe is griping that while filing a claim, the insurance company's customer service representative asked him whether he had honked his horn before getting hit by a truck. A group of people go online to complain about auto insurance rates, and one writes that a major auto insurer pays for police 'departments' radar guns and calls that "sleazy." These are just some of the hundreds of complaints and rumors that are posted on dozens of Web sites and hundreds of Internet newsgroups about insurance companies.

Insurers' reputations are under fire online every day. Insurance companies that spend millions on advertising and public relations to project images of caring are seeing their companies described as heartless and corrupt. The negative comments appear on Web sites that can be general in nature, such as www.badfaithinsurance.org, or focused on one company, such as www.nmlcomplaints.com, which deals strictly with Northwestern Mutual Insurance Co.

But the complaints aren't posted just on anti-insurance company Web sites and newsgroups, which are subject-specific online groups where people can exchange messages. They appear on consumer-oriented sites, such as epinions.nbci.com, which is part of the NBC network's Web site. "It's like the Wild West out there on the Internet; people can say what they want," said Nancy Sells, vice president of eWatch, which monitors 66,000 newsgroups for its clients. Some sites even require membership and offer a second tier of access that provides legal help and research assistance. Other sites are branching off and selling merchandise. Several of the Web sites even sell T-shirts and bumper stickers bearing their online addresses.

Insurers' Reaction

In response, insurers are concentrating on consumer relations and hiring companies that scour the Internet for what's being said about them. "We're paying closer attention to the sites and reacting more proactively to them," said Zoe Younker, a State Farm Group spokeswoman. The insurer has both internal and external, employees monitoring the newsgroups and the Internet for any mention of the company name. State Farm often will contact both the Web site and the complainant. "Web sites sometimes link to our sites to allow their viewers to contact State Farm directly," Younker said.

Northwestern Mutual, the 20th-largest life/health group in the United States, is aware of third-party Web sites, but it doesn't respond to them. "It's Northwestern Mutual's practice to handle each policyowner inquiry on an individual basis, responding to each expeditiously, appropriately and fairly," the company said.

Allstate, the second-largest personal lines insurer, monitors newsgroups, but it reacts differently to consumer complaints. "We find it more constructive to resolve customer concerns by working with customers directly. We welcome direct customer feedback through local Allstate agents, claim representatives, our tollfree customer information centers, online at Allstate.com [www.allstate.com] and through regular customer satisfaction surveys," said Justin Schmitt, an Allstate spokesman.

The Internet is the source of the anti-insurance company deluge, and insurers--like everyone else--are discovering the growing power of this phenomenon. "Thousands of people have a computer on their desk with as much capability at their fingertips as once was housed in an expensive and complicated mainframe. Obviously, the decentralization of power is no guarantee that the people will make good or wise use of it," writes Dr. Norman Coombs of the Rochester Institute of Technology.

"The Internet now pervades every aspect of culture and is taken for granted. There is a rule of thumb in the industry: The amount of data transferred is doubling every six months," said Kevin Martin, chief executive officer of pair Networks, a Web hosting company. Martin has been working in the Internet industry for 12 years and his company hosts more than 102,000 Web sites.

The Internet is essentially a huge bulletin board where millions of consumers can post every misunderstanding and denied claim. While just five years ago a policyholder who was unhappy with a claim settlement might write a letter to the company or send a letter to the editor of a local newspaper, now any disagreement can be publicized on the Internet to an unlimited audience.

"There is a catharsis and type of group therapy involved. And the Internet's anonymity adds to the willingness to complain," Martin said. The Internet has made the world smaller and empowers consumers with more information, while giving insurers a more honest form of feedback.

Bad Image

To hear marketing professionals tell it, insurers are easy targets for verbal assault because of the very nature of the product. Michael Sedge, CEO of The Sedge Group, a marketing company, pins insurers' bad image on the fact that consumers are forced to buy insurance in certain cases, and they hate the idea of cold-call insurance sales pitches. "From a branding-expert point of view, the insurance industry has a love/hate relationship with consumers," Sedge said. "They hate the cold-call phone pitches of insurance brokers trying to get in their door. They hate the idea of monthly payments. But they love collecting at the end of a matured policy or being covered when it comes time to pay for a major car accident."

Another industry observer, David Marguiles, president of The Marguiles Communications Group and a former investigative reporter, lists three reasons consumers dislike insurers: Insurance companies work with people at times of great stress; they often have to say no; and their communications are often legalistic, impersonal or unintelligible.

Defensive Scouting

Internet newsgroups and online message boards differ from chat rooms in that they are archived, and the technology that moves newsgroups moves slower. Insurance company bashing most often occurs on newsgroups, because there are so many of them out there--66,000. Because they are archived, newsgroups are a source for research. The number of topics covered in newsgroups is vast, ranging from parenting teens to issues in Latvia.

U.S. businesses are discovering that the anti-company Web sites and newsgroups reveal what consumers think about and how they relate to a company and its products. Sells, of eWatch, says top executives of companies can mine these sites to be forewarned about what's being said about their company. "They don't want to arrive at work at 8 a.m. and hear that a company board member read something bad about the company on a Web site. They don't want to be the last to know," Sells said. "It helps to find out what customers expect from us," agreed State Farm's Younker.

Plugging Leaks

The staff at eWatch reports to client companies daily about what the public is saying. The company uses eWatch's software to monitor Internet newsgroups and Web sites for a particular company name. Companies vary on what information they are looking for in the newsgroups, Sells said. If a merger or acquisition is imminent, for example, companies want to know whether any news about the impending business transaction is being leaked online. One of eWatch's clients, in fact, had to deal with that scenario. After announcing a merger, the company was approached by the New York Stock Exchange after rumors about the deal were leaked through message boards. The company was able to mitigate the problem by producing the records of eWatch's monitoring. "Because the Internet can be potentially damaging, most companies have someone or some company scouring the Web sites, because it's important to distinguish between rumors and allegations," Sells said.