The Internet’s consumer VOICE

Originally a medium for scientists to exchange information, the Internet’s use has rapidly expanded to become a virtual commercial marketplace. And, with the Internet’s commercial potential beginning to truly surface, consumers through news group forums and dedicated web sites are now reacting to perceived unfair business practices. As these widespread forums continue to grow in popularity, financial service providers like insurers can ill afford to ignore the potential consumer backlash through the Internet.

The insurance industry has not escaped the attention of growing Internet consumer news groups forums. Cyber Vigilante, Goldcar and Accident Check have become well-established sites for voicing complaints. Whether these complaints/issues have foundation or not, insurers cannot afford to ignore the negative marketing fallout of these news groups.

Typical complaints expressed include cases such as “Cynde” and “Connie”. In Cynde’s case, she crashed into a freeway guardrail due to a malfunction of the vehicle, resulting in a total loss. The insurer offered below what she regarded as being the vehicle’s true value. After much negotiation, Cynde settled for the insurer’s offer but expressed her strong objectives over the Internet, gaining substantial support.

Similarly, Connie recently told Goldcar message board readers how her 1987 Plymouth Horizon, driven by her son, was totaled in an accident. A vehicle crossing oncoming traffic hit the car. The other driver’s insurer offered a $550 plus tax payout, with what she describes as a “take it or leave it!!!” attitude. She declined and took the insurer to court which, through a pre-trial hearing, her attorney established that the vehicle was worth about $1,500. The insurer’s attorneys took note of this and stated they would return with a response from their client. “Yesterday was the second pre-trial and their attorney was a no-show,” she writes. “My attorney has now filed for a jury trial. There is now an $1,800+ storage bill for a car worth less than that. This is actually starting to get ridiculously funny.”

Connie’s posting drew several responses, including one from “Woody/ GA.” His advice was, “I think the logic is deceive, delay, defeat. Hang in there!” A West Virginia resident suggested that Connie has grounds to file for punitive damages. “Juries hate insurance companies,” the advice giver notes.

Carrying a cross

A quick check of news group sites (as mentioned above) shows that most people post messages to recount a sad tale and then ask for advice and moral support. However, this venting is paled in comparison with some of the dedicated web sites established by wounded parties. For instance, Paula Moran and fellow cyber vigilante Jim Mooney have spent a combined 90-hour a week average since the fall of 1997 in administering a web site dedicated to voicing alleged unfair practices committed by one of the U.S.’s largest personal insurers. Neither Paula or Jim receive any financial compensation for their efforts. “We have about 1,500 people visit our site each month,” Paula says.

Cyber Vigilante is a crowded site, with a hodgepodge of letters (from consumers, attorneys and past and present insurance agents), news articles and opinion pieces. Warnings such as, “you think you’re safe because you’ve paid your insurance, but if disaster strikes, your ‘trusted’ company may put you into a horror movie. Be warned or be sorry” are commonplace on the site.

Even Smart Money, which is owned by the publisher of the Wall Street Journal — considered a friend of business — uses their website to take shots at the insurance industry. On its web site, Smart Money offers an article titled “10 Things Your Auto Insurer Won’t Tell You.” Number five — “We’ll stiff you if your car is totaled…”

Insurers taking note

Finally, some insurers do seem to be taking these Internet news group sites seriously. Anne Cochrane, head of communications and public affairs at Royal & SunAlliance, says the insurer is keeping constant tabs on the feedback written at these sites. “We even run proactive searches on our company name from time to time [in search engines] to catch all mentions. We are aware that the Internet has become more of a weapon for people with a complaint,” she notes. To date, Royal & Sun Alliance has been mentioned in only a few isolated messages, she adds.

The Internet activity has definitely caught the attention of major U.S. automobile insurers. A spokesman for Illinois-based Allstate Insurance Co. says the company checks the Internet sites on a regular basis. “We take these sites seriously, that’s why we spend the time monitoring them,” says Allstate’s Elio Montenergro. “At this point we just monitor — we haven’t decided what else we might want to do,” he adds.

Montenergro believes that Allstate is successfully conveying its message through to consumers by way of its advertising and community outreach programs.

Similarly, Kitty Miller, media relations manager for Farmers Insurance in Los Angeles, says an employee in the company’s corporate communications department regularly checks Internet sites. “We monitor them only to see if there is anything that would warrant legal action on our part,” she says.

So far, Miller says, Farmers has taken no action against any message board administrator or individual message poster. She adds that the company has not altered its marketing strategies as a result of these boards. “It has been our experience that people don’t make their decision to select an insurance provider based on just one [Internet] site,” she says. “We hope that they will look at a number of sites, including Farmers’, as a total package of research.”

Philip Yount, president of Oregon-based Grange Mutual Insurance Co., has not seen any of the above mentioned consumer complaint sites. However, he is not surprised at the disgruntled views being expressed: “We [the insurance industry] don’t do a very good job of educating the public about our product. Even though we’ve known for the past 20 years that we’ve had problems, we haven’t improved that much,” he observes.