Smoothing the way: aggregators can help insurers increase the quantity and quality of online sales.The role of aggregator as a key distribution channel for online insurance sales is gaining importance. But to have an effective aggregator strategy, insurers must first trader-stand the aggregator operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. . Insurers will then be able to improve online market presence and increase online sales. An aggregator--such as Insure Insure can mean:
In the early years, insurers' Web sites were the only gateway to online policy purchases. The next phase had intermediaries, such as brokers and agents, providing online sales portals. Aggregators are the latest addition to the online sales channel. They are independent of insurers and intermediaries and can provide consumers with online research, quotes and even applications for insurance products. [ILLUSTRATION OMITTED] Aggregators collect customer information and details about the risk to be covered and send it to various insurance industry partners. These partners send back quotes, declination declination, in astronomy, one of the coordinates in the equatorial coordinate system. The declination of a celestial body is its angular distance north or south of the celestial equator measured along its hour circle. notices or requests for additional information. (Additional information is usually collected directly by the insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. .) Many aggregators have more than 20 insurer partners, and therefore can provide customers with a larger number of available offers than other intermediaries. Aggregators supplement the coverage with ease of use and convenient access to research. As a result, the share of aggregators in online insurance sales has increased. Sales transactions processed entirely on the Web now account for 21% of all new customer insurance sales, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. J.D. Power and Associates, and this upward trend is expected to continue. "Pure aggregators" play the role of introducers in the insurance value chain. They partner with insurance providers to place customer requests and get quotes. Online customers reach aggregators through the aggregators' portals, which help them explore different insurance products. Consumers can review detailed comparisons and use independent rating mechanisms to help them make informed decisions. It is important for aggregators to differentiate themselves from brokers. Unlike brokers, aggregators do not maintain brick-and-mortar brick-and-mor·tar adj. Located or serving consumers in a physical facility as distinct from providing remote, especially online, services: brick-and-mortar classrooms; a brick-and-mortar bookstore. offices or stay involved beyond the insurance sale. Differentiation can be achieved through marketing, as well as setting up a flexible Web site that's designed to handle a variety of customer scenarios. Faced with the increasing consumer use of aggregators, insurers can decide to continue using current distribution channels; participate with existing aggregators; establish an independent aggregator service; or acquire an aggregator. A Model System The high-level operating model for an aggregator includes: * Inviting customers to the aggregator through marketing activities * Collecting relevant information about customers and their insurance needs * Providing quote comparisons * Transferring customers to insurers for fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. * Generating management information * Managing financial accounts with insurers * Providing online and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. contact center channels for customer service * Conducting follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan marketing for selling, cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. and up-selling Up-selling is a sales technique whereby a salesman attempts to have the consumer purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. [GRAPHIC OMITTED] Staying in the Loop To contact customers, aggregators either use e-mails sent by a service provider, or telephone contact centers. Incoming customer communications are managed through online Web forms, contact centers and e-mails. Communicating with insurance partners is best achieved through real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. Web service solutions that are integrated seamlessly with partner systems. E-mails and end-of-day batch processing (1) Performing a particular operation automatically on a group of files all at once rather than manually opening, editing and saving one file at a time. For example, graphics software that converts a selection of images from one format to another would be a batch processing utility. using formats such as Flat files, CSS (1) See Cascading Style Sheets. (2) (Content Scrambling System) The copy protection system applied to DVDs, which uses a 40-bit key to encrypt the movie. , RSS (Really Simple Syndication) A syndication format that was developed by Netscape in 1999 and became very popular for aggregating updates to blogs and the news sites. RSS has also stood for "Rich Site Summary" and "RDF Site Summary. , XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. and others, are popular solutions. Aggregators own the customer information and follow-up data they acquire from customers during conversions, cross-selling and up-selling opportunities. Follow-up is mostly done through e-mail reminders and telephoning. Aggregators may award the marketing rights to successful insurers and follow re-solicitation restrictions based on the contractual agreements. The revenue model of an aggregator can be conventional or a hybrid. With the conventional model, revenue is a function of premiums generated. Aggregators collect a commission for sales (policy conversions) happening directly or through the partner insurer. With the more sophisticated hybrid model, revenue is a function of not only premiums generated, but multiple parameters such as number of transfers to partners, charges for marketing rights and charges for banner space on the aggregator's site. For an insurer, the decision to adopt aggregator services should follow careful evaluation of the cost benefits, including: Enhanced online reach: Through aggregators, the insurer can reach a majority of the online customer base. Emerging distribution systems: For insurers, it is important not to be left out of the dynamic marketplace. Increased online sales: Studies show that sales through aggregators are growing annually. Lower investment costs Those program costs required beyond the development phase to introduce into operational use a new capability; to procure initial, additional, or replacement equipment for operational forces; or to provide for major modifications of an existing capability. : Insurers can attract a new customer base for less. Improved customer perception: The right brands placed through aggregators can burnish insurers' reputations. However, there are also concerns. Aggregators may appear to encourage commoditization Commoditization 1. A situation when illiquid financial contracts are changed or modified in a way that promotes trading and results in a more liquid market. 2. Making a product into a commodity. Notes: 1. of products, since the emphasis often is on lowest possible price. Customer ownership may not be clear, especially when there are clashes with conventional distribution channels. Aggregators are likely to encourage further customer churn churn: see butter. and create lower customer lifetime value for the insurer. What's more, the positioning and brand image of the aggregator may not match the value proposition of the brand the insurer wants the aggregator to offer. Insurers should remember that the majority of customers use aggregators for a cheaper quote and for research. They look for portals that are easy to use, provide adequate information and help them identify the quote that best matches their interest. Factoring in Success Four broad areas to consider while formulating a strategy for partnering with an aggregator are marketing, business, operations, and finance and legal. The insurer must clearly understand the integration aspects of these four factors. Two sub-areas under operations also must be addressed: business process and technology. [ILLUSTRATION OMITTED] For an insurer-aggregator strategy to succeed, business processes must be designed and implemented that will: * Guarantee that product, marketing, promotional information and periodic updates are posted on the aggregator's Web site * Transfer clients from the aggregator and complete the buy process * Manage queries and complaints on a regular basis * Manage product/offer introduction, upgrade and closing * Inform aggregator about changes in business requirements so the hosted products are successfully processed * Resolve conflicts such as customer information ownership * Allow management information exchange * Settle accounts, such as payments and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed The insurer also cannot ignore technology issues, such as identifying the "touch points" in the insurer's systems when submitting requests and receiving information. The two sides must decide when the aggregator should hand off the customer to continue the buying process, along with all required data elements, so requests can be processed easily and accurately. The arrangement must include the ability to uniquely identify the customer and quote at the partner end under various scenarios, such as when the customer visits the insurer's Web site later, or instead continues to buy through the aggregator. Studies have shown most customers return to the insurer's Web site to complete the buy, although much later. And the insurer's system must be able to manage the data load from the aggregator. Some insurers may not want their systems to suffer from excessive transaction volumes from aggregators. Aggregators are a strategic option that insurers should consider as a new channel for distribution. Participation with aggregators should allow insurers to expand their online reach and increase market share along with online sales. To partner with aggregators, insurers should clearly identify the brand match and then formulate formulate /for·mu·late/ (for´mu-lat) 1. to state in the form of a formula. 2. to prepare in accordance with a prescribed or specified method. a detailed plan based on the evaluated strategic options. * The Issue: Online aggregators are generating a growing number of insurance sales. * The News: A variety of issues must be resolved before an insurer-aggregator partnership succeeds. * The Future: Aggregators are becoming a distribution channel of choice for certain consumer segments. Standard Equipment, Optional Features Here are some must-have (basic) and nice-to-have (differentiator) features of a successful aggregator: MUST HAVE: * Participation that allows comparison of the best prices from the biggest brands and leading providers * Intuitive system Intuitive™ system Cybersurgery A proprietary minimally invasive surgical system which provides 3D visualization and translates the surgeon's hand movements into precise microsurgical movements via 8 mm ports. Cf Cybersurgery. that is easy for consumers to use * Seamless online integration so customer information provided to the aggregator can get to the insurance partners * Adequate information availability so consumers can learn about providers, products and the fulfillment process * Guarantee that a quote's terms and price are valid * Ability of aggregator to communicate with customers electronically * Adequate management information ability for transaction and Web analytics * Ability to apply business rules at various levels at the aggregator end to filter quotes that meet the partner's risk appetite * Data model covering all important partner data requirements NICE TO HAVE: * Independent product quality ratings * Customer choice "popularity" symbols * Superior site features compared to competitors. For example, online "chat" to customer confidence * Secure log-in Verb 1. log-in - enter a computer; "Have you logged in lately?" log in, log on access - obtain or retrieve from a storage device; as of information on a computer and quote retrieval with minimal data collection for partners * Detailed product comparison to reassure re·as·sure tr.v. re·as·sured, re·as·sur·ing, re·as·sures 1. To restore confidence to. 2. To assure again. 3. To reinsure. customers they re getting the best deal, and to encourage up-sell * No hidden costs * Online chat/call center/e-contact using Web forms or e-mail * Ability to incorporate providers' display rules * Ability to control traffic to partner systems via aggregator * Flexibility to quickly incorporate new or modified partner requirements * Enhanced support of data warehouse and analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. tools Tuhin Banerjee Banerjee (anglicized from Bandyopadhyay) is a prevalent brahmin surname in the Bengal region of India. Banerjees are kulin brahmins, the highest class in Bengal (along with Mukherjees, Chatterjees, Gangulis, and Ghoshals). and Satheesh Kaimal are senior associates in the insurance practice at Infosys Consulting. Banerjee can be reached at Tuhin_Banerjee@infosys.com, and Kaimal can be reached at Satheesh_Kaimal@infosys.com. |
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