T H U R S D A Y ,  A U G U S T   1 6 ,  2 0 0 7 

Big “I” National News

L&H Trends

Low Life Online
Life insurance carriers rank low in online services.

Thrivent Financial ranks highest among life insurers when it comes to online service, according to The Customer Respect Group. Also earning good scores in the group’s recent study are several independent agent carriers. However, it’s not all good news, with life insurance carriers ranking in the bottom third of all industries studied. 

The Customer Respect Group, an international research and consulting firm that analyzes the way corporations treat online customers, has released its Third Quarter 2007 Online Customer Respect Study of the Life Insurance Industry. The study examines the Web sites from several insurance companies to compile a Customer Respect Index (CRITM). The index is based on three main concerns customers have when using Web sites: 

• Site usability: How usable the site is to a wide range of users, including its simplicity (ease of use) and attitude (accessibility).

• Communication: How willing the company is to engage in a one-on-one communication to answer specific questions. This also includes responsiveness (quality of e-mail replies in both speed and helpfulness, response tone and other communication methods).

• Trust: How much customers trust a site with their personal data. This includes transparency (clarity and comprehensiveness of privacy policies), principles (respect for data privacy, cookie explanation) and privacy (respect for data privacy, clarity and comprehensiveness of privacy policies).

While Thrivent Financial is the only company to receive the “Excellent” rating, five other companies rate “Good” with scores of six or higher. Mutual of Omaha is the highest ranking of the “Good” companies with a 6.5 on the CRI, followed by Nationwide and Symetra with 6.3, and Genworth and Principle Financial with 6.2.

The study finds the average CRI for life insurance companies is five on a 10-point scale, which places it in the bottom third of all sites reviewed in all industries, but the ranking is an improvement from the 2006 study.

Much of the improvement was the result of better transparency in privacy polices from life insurers. In last year’s study, life insurers ranked in the bottom 28th percentile; in the latest study, they jump to the bottom 41st percentile. The worst CRI area was in site simplicity, in which it scores in the bottom 28th percentile of all industry sites. Online responsiveness also continues to be an issue for life insurers because 20% still don’t offer e-mail capability, according to the study. 

On the positive side, the percentage of companies that respond consistently to inquiries increased since last year’s report from 44% to 56%. However, in no area was the insurance average above that of the all-industry average, the report says.

“The industry continues to struggle to match standards set in other industries, but we are starting to see leaders setting a pace as Web sites become more integral to the life insurance industry,” says Terry Golesworthy, president of The Customer Respect Group. “The industry continues to see Web sites as largely a lead-generation vehicle for agent and broker networks, but we expect changes to occur that might upset the established industry positions as seen in other industries.” 

Michelle Payne (michelle.payne@iiaba.net) is Big “I” writer/editor.

On the Hill

Senate Banking Committee Approves Natural Catastrophe Insurance Commission

Commission will recommend solutions to insurance crisis facing disaster-prone areas.

The Senate Banking Committee, chaired by Chris Dodd (D-Conn.), passed Aug. 1 the Commission on Natural Catastrophe Risk Management and Insurance Act of 2007. The legislation would establish a bipartisan commission to examine natural disaster risks and recommend possible solutions for this serious problem.

“Independent insurance agents and brokers see firsthand the difficulty that consumers have in finding affordable insurance in many parts of the country due to natural disasters,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “As the conduit between consumers and insurance companies, our membership has long advocated that Congress develop a national solution to this national problem. We see the commission created by this legislation as a critical first step towards that goal, and we are hopeful that the commission will recommend a comprehensive solution.”

“We very much appreciate the senators’ efforts to address this crucial national catastrophe issue,” says John Prible, Big “I” assistant vice president for federal government affairs. “We applaud the Senate Banking Committee members for their action today and look forward to working with them and their colleagues to enact this common-sense legislation into law.”

Patrick Royal (patrick.royal@iiaba.net) is Big “I” director of public affairs.

L&H Trends

Why Independent Agents’ Efforts Matter to Carriers
Agencies’ recruiting, technology, branding initiatives impact carriers’ long-term outlooks.

A Wall Street Journal article pertaining to the fashion industry recently caught my eye. In the article, which details the earnings outlook and long-term prospects for Jones Apparel Group in New York City, industry analyst Brad Stephens makes this intriguing observation: “The most important factor is not the strength of the brand, but the strength of the retailers who sell the company’s brands.” This analogy is also very applicable to insurance carriers that utilize independent agents as their distribution force.

The idea that the independent agent is critically important to the success of insurance carriers does not diminish the importance of carriers’ resources and capabilities of executing on support areas like underwriting, claims and even call center assistance. But in order for independent agent carriers to grow and compete, particularly with captive writers, it is of paramount importance that independent agents perform strategic planning and allocate resource¬—i.e. research & development—in finding talent and providing adequate training for the agency to survive and thrive. Agents also need to make similar investments in technology to capitalize on innovations and increase efficiencies for ease of doing business. It’s also important to have consumer-friendly, interactive Web sites like the direct writers.

Ask yourself this: How does my agency promote itself to the public to generate more business? While agencies spend money on local promotions like program guides, co-op advertising and other community activities, it is difficult to have the money to create a brand and have high-quality ads. One avenue is to take advantage of the Trusted Choice^® brand to co-brand the agency and leverage the scope of Trusted Choice^® advertising initiatives. One of the biggest frustrations that independent agent carriers have is that their co-op dollars go unspent. Since these companies depend on independent agencies’ investments to drive more business, they have a direct, vested interest in agencies’ future plans.

Independent agencies are becoming more focused than ever on having a multi-prong approach to providing different ways of meeting their customers’ needs. In addition to 24/7 service, compelling Web sites and other services, there will never be a substitute for the relationship that agents have with their customers and their ability to provide choice and customization. However, consumers are typically confused about the difference between captive and independent insurance agents, and agents need to refute direct writers’ notion that “one size fits all.” The more agencies can reinforce their value proposition of choice, customization and advocacy, the more that they can differentiate the value of their service from a commodity. Independent agencies’ brands are an important part of the equation in maximizing the value and long-term growth of carriers that use independent insurance agents as their distribution channel.

Dave Evans (dave.evans@iiaba.net) is a certified financial planner and an IA l-h contributing editor.

Agency Management

Does an NSF Check Constitute Nonpayment?
In some cases, returned checks can result in retroactive cancellations.

An insured makes a payment by personal check on a policy that is scheduled to cancel for nonpayment. The check is received before the cancellation date and the company issues a reinstatement notice. Three weeks later, the insured and agent receive another cancellation notice stating that the policy is cancelled retroactively to the previous cancellation date because the check was returned “NSF” by the bank for “insufficient funds.” Is this correct? 

The Big “I” Virtual University “Ask an Expert” service received the following question on the matter from a New York agent: “I have a question concerning nonpayment cancellations of personal lines policies. An insured makes a payment by personal check on a policy that is scheduled to cancel for nonpayment of premium. The check is properly received before the cancellation date and the company issues a reinstatement notice. 

“Twenty-five days later, the insured and agent receive another cancellation notice stating that the policy is cancelled retroactive to the previous nonpayment date as the check was returned by the bank as ‘NSF.’ The original cancellation, as well as reinstatement, make no reference to reinstatement contingent on a check not being NSF. There was never any letter to the insured or agent about an NSF check. Is the retroactive cancellation, which now leaves the insured in a terrible lurch, legal?

“Some companies include specific wording on their cancellation and reinstatements that say the original date will stand with an NSF check, and I have no issue with them. However, in absence of NSF disclosure, is a company operating outside of insurance regulations?”

This is an issue that should be addressed by your state's insurance laws, regulations or insurance department directive. For questions involving statutory or regulatory issues, check with your state Big “I” association and/or insurance department.

The position of most states on this subject is that submission of an NSF check is equivalent to no payment at all. Since the check was invalid, it's effectively a nonpayment. If the company has provided prior notice and a cancellation date for nonpayment, then the cancellation will probably be upheld. 

“The NY Insurance Department, in a 1994 opinion (see below) said that paying a premium with a bad check is the same as not making a premium payment, and therefore an insurance company could legally cancel a policy back to its original cancellation date,” says Tim Dodge of the Big “I” New York association. “New York law does not require insurers to insert language in cancellation notices to the effect that reinstatement depends on receipt of a valid check. The laws and regulations require other specific wording (e.g., a warning that auto liability insurance is required), but they don't require the wording to which you refer.”

Here’s a copy of the opinion: 

New York
SELECTED OPINIONS OF THE GENERAL COUNSEL INSURANCE DEPARTMENT
OGC Opinion No. 94-75 Cancellation for non-payment of premium
August 30, 1994

You recently requested clarification of an opinion issued by the Office of General Counsel and published in Counsel's Corner in The Bulletin of December 1993.

The opinion concerned cancellation of insurance policies for non-payment of premium when the insurer subsequently receives the premium payment. That opinion stated that a premium is considered remitted as of the date it is postmarked.

You raised the question of whether the premium is remitted if it is postmarked prior to the cancellation date but the check is subsequently dishonored. If the check is dishonored, the premium has not been remitted, regardless of the date it is postmarked.

Issuance of a reinstatement notice in such a situation, where the check is dishonored subsequent to issuance of the notice, is moot. Mailing the reinstatement notice does not rescind the cancellation notice if the check is dishonored. A dishonored check is not a premium payment."

For more information, click here.

Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University.

Tech Update

Placement is Everything
How to successfully position an agency on Internet search engines.

The Internet has become the place people look first for goods and services. It is no different for consumers and businesses looking to find a new insurance provider or information from their current agent or company. The Internet is radically transforming how businesses establish their brands and market their products. Whenever a massive change like this occurs, it creates an opportunity for businesses that seek to understand it and then change their strategies to take advantage of it ahead of competitors.

A recent McKinsey study confirms that consumers’ insurance shopping behavior is changing radically. When the study asked consumers how they shopped for auto insurance in 2005, 16% used the Yellow Pages (down 23% from 1998), 17% called their agent (down 9%), 17% asked for referrals (down 26%) and 12% replied to an ad (down 7%).

Meanwhile, 28% searched the Internet in 2005 (up 18% from 1998), 24% called a toll-free number (up 6%) and 14% used a local insurance outlet (up 3%).

McKinsey also found that 43% of customers in 2005 did not use an agent to get auto insurance quotes when shopping. Is there any question where these trends have been heading since 2005, as the Internet has continued to gain prominence and the direct sellers of insurance have bombarded the airwaves urging consumers to shop via the Internet and 1-800 numbers?

Given these changes in consumer shopping behavior, independent agencies have a rare opportunity right now to get a jump on their agency competitors by building a Web presence and learning how to use search engines effectively. Most independent agencies are very poorly positioned on the Internet today. According to the 2006 IIABA Agency Universe Study, only 29% of independent agencies see their agency Web site as an important tool in building their image and only 17% use search engines for marketing. Moreover, the 2006 AUGIE Survey found that of the 75% of agencies with Web sites, only 44% see the need to update them regularly (31% said continuously; 13% monthly), while the majority update them rarely (35%), annually (18%) or never (3%).

These trends and statistics demonstrate the sense of urgency to build a strong presence on the Web and to learn how to use search engines.

Google is by far the most popular search engine, accounting for a little over 49% of the searches. The three next biggest are Yahoo (23.8%), MSN (9.6%) and AOL (6.3%). To give you some measure as to how fast these companies are growing and changing the world of marketing, Google’s revenues were $6 billion in 2005 and are projected to be $16 billion in 2007. These revenues, of course, come primarily from paid “sponsored links” that appear as the first few shaded listings in left column of the search results and in the right column.

Independent agencies can achieve a top 10 position for their Web sites in the organic (or free) search listings, which are awarded by the search engines depending on the site’s content, popularity and a whole array of other proprietary criteria. It is valuable for agents to be aware of the major issues involved in achieving a good search result for their Web sites, even though most are likely to engage a Webmaster skilled in search or one of the many search optimization firms to assist them.

First, an agency needs to determine the objective(s) for its Web site. Is it to provide information about the agency (focus, location, staff, contact information), to enable 24/7 customer service and information, to attract prospects, etc.? It is often more effective for agencies to have a number of Web sites, each designed to accomplish a specific objective. One might be for basic agency information and customer service; others might be targeted to the agency’s specialties and designed to attract the specific prospects the agency is seeking.

Having good content on the site is the most important thing an agency can do to achieve a good search position. Independent agents are in an excellent position to provide this content because they know the questions customers ask them every day and have the insurance expertise to provide high-quality content. There is a great deal of competition from other Web sites on the most basic insurance questions, so agents are better off designing pages that provide more specialized information that they know customers are interested in, as well as information about niches in which they have particular expertise. This type of quality information conveys to the user that the particular agency is professional and will add value to the overall insurance relationship.

It is critical that the agency keep the site fresh and continuously add new content, because this will encourage the search engine “spiders” to visit the site frequently and rate it highly. All of the site’s links should work correctly; avoid “dead ends” and have an easy-to-navigate structure. The search optimization firms recommend a home page, and no more than two tiers of pages linking off of the home page (each tier having eight or less pages). This means the specific information the reader or the search engine “spider” is looking for is no more than two clicks away.

The search engines prefer to link directly to the landing pages within Web sites that specifically address the questions that have been raised in the search. Always keep in mind that the primary objective of the search engine is to direct users to high-quality information that specifically answers their questions and satisfies their needs, so they’ll repeatedly use the search engine.

Agencies should also determine different “keywords” for each of the Web pages within its Web site. Use keywords consumers are likely to use in making a search and which accurately reflect the content on the page. The trick is to pick specific keywords, as that will reduce competition from other Web sites and will provide the agency with the type of customer it’s seeking. Shoot for keyword phrases of two to five words in length. To narrow the competition and target prospects to those in your community, agencies may want to include their location as part of their keywords. It’s also a good idea to establish a free Google local business listing. (Google “Google Local Business Center” for more details).

Google has a free tool to tell agencies how often the keywords it is considering are searched and how much competition there is for them (at least with regard to paid searches). Wordtracker (www.wordtracker.com) also provides good keyword tools.

In order to maximize search positioning, agencies should include the keywords in the URL, title tag (found at the very top of the Web site), the description meta-tag, the Keywords Meta-Tag and then in the body of the text where they fit (particularly in the headings and links used). The search engine “spiders” compare the tag information with the content on the site to make sure the content is delivering on what the keywords promised. Note “spiders” cannot read images, including PDFs produced using PhotoShop. HTML is best, but if PDFs are included, they should be created with a text-based program, such as Microsoft Word or Adobe PageMaker so that the “spiders” can read them. For more detail, see the excellent Search Engine Optimization 101 tutorial at www.marketleap.com.

In addition to providing excellent content, good keywords and keyword placement and well-structured navigation, a Web site’s search position can be greatly enhanced when other sites—particularly those highly ranked by the search engines—link to it. The search engines regard these links as a vote of confidence in the site. Once again, the more useful the content on a site, the more likely other sites will be willing to link to look at it. Inbound links are most important. Outbound links will not hurt a search positioning if they lead to relevant additional information. Agents should seek links from other businesses in their communities, as well as from the media and public entities, particularly where the agency’s Web site has insurance and risk management information that would be of interest to the constituencies of these other entities.

Once the agency’s Web site is well established, the agency should consider generating media news releases on insurance topics of high interest to the public containing links to more content on the agency’s Web site. The agency should send these releases to community news organizations as well as consider using PRweb.com (which reaches a broad number of Internet publications) in the hope these publications will link to the agency’s Web site for this informative and timely content.

Agencies should regularly submit their Web sites to the major search engines to facilitate the indexing of pages (Google “search engine registration” for more information.) It is also very important to subscribe to a good Web site analytics service, so that agencies can measure the kind of traffic they are generating to various Web pages and how long they are visited. With the right keywords and content, sites should be generating a minimum of “bounces,” which are those who leave a site almost immediately after arriving. Also, make sure agency staff asks all prospects how they learned about the agency.

There is a science and art to achieving effective search engine positioning, but with the right content and taking the steps outlined above, small businesses can do very well on search engines. Be patient; it can take as long as 10 months to see a positive change in search results. Just as agents have learned over time what works and what doesn’t for an agency with Yellow Pages, direct mail, lead generation and advertising, they will acquire skills on using Internet search engines effectively.

A Web site and the effective use of search engines offer an agency an excellent opportunity to expand their market area and customer base. (Additional resources include: www.searchengineguide.com, www.wordtracker.com - click on “academy”, www.google.com/webmasters and www.searchenginewatch.com— click on “search101”).

Jeff Yates (jeff.yates@iiaba.net) is executive director of the Agents Council for Technology. For more information on ACT, go to www.independentagent.com/act.