Most insurance companies are lagging behind their financial market counterparts in online offerings -- a risk that may lead to less market share for insurers, according to a survey conducted by Booz-Allen & Hamilton.
The company's third annual "Internet Insurance Survey" studied the usage and trends of Internet technology within the insurance industry. More than 150 insurance companies and 200 Web sites participated, said the management and technology consulting firm.
Insurance companies said their Internet and corporate strategies are directly linked, but over 50 per cent of the companies are spending less than $US500,000 per year on Internet capabilities. Most of the money is spent on marketing, customer service, agent support and infrastructure rather than direct sales via the Internet, Booz-Allen said.
Out of the companies surveyed, 60 per cent don't plan to sell insurance on the Internet in the next two years, the study said. For example, 67 per cent of all insurers said they'd never sell an annuity online. The survey said the remaining companies expecting to sell directly on the Net anticipate only a small percentage of new premiums from the Internet. During this same two-year period, customer service will see the bulk of online investing, the study added.
As a result, insurance companies have fallen behind the rest of the financial services market, Booz-Allen concluded.
Insurers looking to sell online must deal with regulations for each state, as well as certain products such as annuities and home-life insurance that require more attention, said Gil Irwin, vice president of Booz-Allen's financial and health services practice.
There are also high expectations among customers to access services on the Web, but insurers run information on separate legacy systems, Irwin said. It would be difficult to consolidate these views in a real-time, up-to-date view for the customer, he said.
Irwin said the hardest challenge to overcome concerns agents and brokers. Insurers "rely on them as their primary distribution channel" and are reluctant to do anything that cuts them out of the sales process, he said.