Cyberspace: The Final Frontier

We’ve all heard the Internet is the way of the future, providing 24/7 service to would-be policyholders. And independent brokers are constantly warning themselves that they had better become more competitive with direct writers and the so-called “virtual writers” in the use of this technology — or else.

But the Internet, while it is no doubt a wonderful tool for mining information at all hours of the day or night, is a complicated creature when it comes to the actual sale of insurance products. And it would appear the protocol and politics around using the Net to provide insurance products and services — and even simple online quotes — to customers is still very much in the territory of ‘The Wild West.’

Anecdotally, brokers commonly compare their experience of providing quotes with that of direct writers and long for the day when they, too, through the use of technology, can provide quick and easy insurance quotes to prospective customers in as short a time frame as direct writers. And yet, in a recent newsletter, the Insurance Brokers Association of Ontario (IBAO) indicated it had conducted a recent technology survey, in which it was found that “most brokerages do have their own Web site, however approximately half of them actually conduct business such as quoting through their Web site.”

Read: only half of brokers are actively using their Web sites to do business, meaning that a lot more of them should look into providing this service. Why bother, you ask?

Well for one thing, we are constantly told that customers like shopping for insurance at their convenience (although it’s probably carrying the argument too far to say consumers like to search for online insurance quotes at 4 a.m.) We are also told consumers are Google-savvy, meaning they like to search for their own information without waiting for someone on the other end of a phone — or a Web server, for that matter — to get back to them. Therefore, or so the argument goes, in conceding the Internet territory to direct writers, brokers could potentially lose part of their customer base and market share to the direct and virtual writers that have monopolized the world of cyberspace.

There are limits to this line of reasoning, of course, one being that the Internet has its own limitations as a medium when it comes to interactive counselling and the provision of expert advice — a central feature of a broker’s service.

Nevertheless, the point is well-taken: One can’t wake up to the clock radio these days or surf the Net without hearing claims by direct and virtual writers about their ability to compare their own online quotes with up to several quotes from the competition.

And while brokers may not be using the Internet to their best advantage, some insurance companies appear to be using the Internet in a way that’s benefiting direct writers.

In the same newsletter in which it summarized some of the conclusions of its tech survey, IBAO said it has “recently been working with various broker insurers that continue to make their quoting information available to various direct writers for the [sole] purpose of comparing prices. In order to work towards preserving the professional and independent image of insurance brokers, IBAO has requested these insurers cease providing their rates to direct writers’ rating providers.”

Actually, some heat was generated on this issue in a past CEO panel discussion, in which one CEO publicly wondered how some companies that don’t provide such quotes to direct writers nevertheless find their company’s information posted among the online comparison quotes. An established protocol about where these online quotes are coming from clearly needs to be defined — for the sake of the consumer, if not brokers and insurers.

Why the need for such a protocol? It seems unbelievable that a direct writer would quote a competitors’ price unless it was lower than or equal to its own. And yet, when direct or virtual writers post their competitors’ rates online, should they not be obliged to disclose as well all of the deductibles, terms and conditions and qualifiers on which the competitors’ quotes are based? Consumers need to know that, when it comes to Internet surfing for insurance, they are not necessarily comparing apples to oranges. To put it very simply, there’s a difference between paying for auto liability coverage of up to $1 million with a $1,000 deductible and a policy of up to $750,000 in coverage that comes with a $500 deductible and ‘accident forgiveness.’

And so as the world increasingly moves into the ‘Wild West’ of cyberspace shopping, independent brokers would be well-advised to take their own advice and stop conceding online territory to direct and online writers. Their insurance advice is just as valuable online as it is in their communities’ Main Streets.