By Cyril Tuohy
The life and annuity industry has heard this story before, and now it’s about to hear it again: Life and annuity carriers just aren’t that into direct Internet-only sales, and many appear to be paralyzed to a certain extent by “channel conflict.”
Many carriers may yearn to be players in the direct channel. Some, such as MetLife, may be putting in a good effort. But for many of the largest life and annuity carriers, and for the bulk of the industry, consumer-facing Internet capabilities aren't a priority — judging by an experiment conducted on dozens of websites last summer by analyst Karen Monks.
“Progress on customer self-service has been too slow,” Monks writes in the conclusion to her report titled “Life Insurance Online Self-Service — Can You Go It Alone?”
Monks says life carriers lack urgency when it comes to their online presence and functionality. That bodes ill for capturing future, younger buyers who won’t give the time of day to companies that don’t offer Internet-based transactions.
“It’s not clear that insurers are ready for the digital world and where things are going,” Monks told InsuranceNewsNet. “Direct is a digital concept and, if they are not ready for an influx of data and analysis, they are not ready to go direct or don’t want to.”
In her study of the top 50 life insurance websites, just over half of the websites helped to locate an agent. None offered an online chat function with an agent, and only 10 percent offered a visitor online chat functions with a customer service representative.
“For most life insurers, the agent and the insurer technology are not seamlessly connected, especially if the agent force is not a captive force,” Monks writes in her report.
Any carrier aspiring to direct sales online should provide a licensed agent to answer a prospective policyholder’s questions — it’s an important part of the sale — yet top life insurance brands are not offering direct sales, according to Monks.
“This is most likely due to the continuing reliance on agents and brokers for sales, particularly high-net-worth sales, and the concern over brand erosion,” Monks writes. “Direct sales create a perceived channel conflict that most life insurers have not resolved.”
No one expects life and annuity carriers to deliver comprehensive services as fast as BestBuy or Amazon via the direct channel. At the very least, though, carriers could use the website to offer calculators and help prospects find agents in their ZIP code.
Still, many life carriers don’t even offer those functions, Monks said. Could this seeming intransigence be possible in the Internet age?
Carriers may be missing out on a “tremendous opportunity” by not offering self-service on websites, the report says.
New sales opportunities for carriers could be opened with more robust agent engagement through effective lead generation created by online help, agent contact and chat, or by offering to find an agent for prospects, Monks writes.
“Direct sales may cause friction with the agent base; however, that doesn’t mean insurers shouldn’t be thinking of a way of engaging customers in a hybrid or semi-direct way to encourage increased sales,” Monks writes. “Sadly, we see few insurers discussing any of these issues.”
Carrier websites are still more “informational than transactional” with regard to marketing and sales. In addition, personal financial planning calculators and real-time online help aren’t the norm. When’s the last time a window popped up on a carrier site asking consumers, “How may I help you?”
Nor have insurance carriers embraced self-service for basic functions such as address changes or online billing, with portals offering only limited functionality, Monks says.
Downloading a claim is more prevalent than it used to be but few life insurers allow for the initiation of the claim online, she says.
Carriers have excuses, many of them valid: rigid back-office systems, legacy platforms ill-suited to the Web, decades-long product cycles, a preference on the part of policyholders to conduct the final sale face-to-face with agents, and the long-standing tradition of selling coverage through intermediaries.
Even so, says Monks, who was formerly with John Hancock, in this day and age consumers have every reason to expect more from insurance websites. At the very least, website should contain calculators that demonstrate the value — and cash values — of a universal life policy.
Nearly every seller of 401(k) products has retirement calculator tools on its website to give investors an idea of the power of compounding. Banks years ago adopted Internet-based transactions and communication years ago.
“There were quite a few fails and the link didn’t work,” Monks said about her summer research on the top 50 individual life insurance websites. “I went to two (insurance carrier websites) today and the websites were down.”
In one instance last summer, Monks uncovered an incident where the system got the policyholder’s name wrong. Such incidents typically happen following a merger, when one insurance company’s policy administration system doesn’t recognize policy numbers originally generated by the acquired carrier.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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