Archive for March, 2005


We recently had a new client stop in that is very successful in selling Medicare supplemental insurance using traditional sales processes. Many of their agents as well as senior management want to start preparing for greater Internet use among the senior population, including their Medicare supplement agents themselves.

This client asked a question: How much utilization is there today among the senior population? A recent publication from the “Harvard Institute for Learning in Retirement” entitled “The Age Explosion: Baby Boomers and Beyond” answers this question and a bit more:

  • Currently, for those who are older than 65 without disability, Internet usage is 25 percent.
  • For those 55+, 72 percent use the internet at home if they also use it at work.
  • Overall, more than 60 percent of people at least 50-years-old used the Internet in some way at the end of 2001.
  • With a 42.7 percent use rate, older Internet users are more likely than any other age group to look up health information online.
  • Finally, from a technical standpoint, the study restated the obvious to support its assertion that Internet use among seniors will only grow: the computers of the near future will be faster, have greater bandwidth, and cost less. (I can hear Morty Seinfeld now, “Jerry, it tells me which restaurants have the cheapest food – pretty good, eh!?!?!”)

The study makes it clear with this statement: American companies “should further stimulate Internet usage by boomers.”

So what does all this mean in the health and life insurance industry? For our new client, they see great urgency to get started now in building an online infrastructure to sell and service the senior insurance marketplace. They said if they wait for all their agents to be 100 percent ready, they will be behind the curve as it takes twelve to twenty-four months to become effective with online sales and service (assuming outsourced development, of course).

So if your strategy is to grow your book of business in the senior market, it seems prudent to include a Web component.


The Internet offers significant opportunity for providing growth in the individual health and life insurance industry.

So what about online quote engines and e-applications? An effectively-designed quote and e-application system for individual health and life insurance needs to be able to accommodate three environments:

  1. Quote accessed at corporate sites by potential customers attracted by the carrier’s advertising.
  2. Quote accessed by independent agents to provide quotes for prospects generated by their own marketing efforts.
  3. and integration with major insurance lead engines – online marketers like EHealth Insurance and Norvax.

I just did a quick analysis of one particular state in the south. There are about 10,000 searches per month across all major search engines for the keyword that includes the state name followed by “health insurance.” Note: Most likely, these are not agents. Agents already know who the major providers are. These searchers are individuals who have a need for health insurance and are looking for solutions. So why aren’t insurance carriers making it easy for those individuals to get a quote or apply online? Most systems I’ve seen just aren’t user friendly for potential customers.

For example, one major carrier requires the searcher to access the parent company site. Then, about 12 clicks later, a persistent and Web-savvy person finally finds the first page of the quote! The big carriers are really fumbling their approach when it comes to online quote engines and applications. That leaves the market wide open for the other guys. If they act quickly and partner with somebody who already knows how to build and promote quote engines and e-applications, they can quantum leap the competition and establish themselves as a smart health and life insurance provider for years to come.

There is a large market at stake — not just the 200 to 300 individuals in one state who want to buy health and life insurance online today, but the 100,000 who want to buy online in that state in 2006, and the 150,000 in 2007. Electronic commerce on the internet is growing and will continue to grow. In 1995 there were $350 million in online sales overall — hardly a blip on the $1.7 trillion in retail sales. But by 2006 experts believe online sales will total between $5 billion and $14 billion. Online insurance sales are sure to generate a chunk of that, and the carriers and distributors who are taking positive steps today will get the biggest piece of the pie tomorrow.

Again, as I’ve said before, don’t let your IT department slow you down if they are buried elsewhere. Find a technology partner that knows how to make online quoting and e-application easy for the prospect, and get in the game!


We took a call today from a carrier we’ve partnered with in the past on a few projects. They wanted to know how we handle credit card and check authorizations. We gave them the simple answer — simple by our standards anyway.

Upon further analysis, this person was calling about an internal Web development project that was now in its 18th month or so — a Web dev project that was supposed to be launched in 12 months and now looked to be closer to 24 months — easily a million dollars in the making. Given the general description of what they were working on, it sounds similar to a project we completed last year in about 18 weeks or so with a 5-figure cost to the client. I don’t mean to sound like, as my teenage kids say, “We’re all that.” But I do want to point out once again that internal Web development is a big mistake.

Here’s why:

  1. It’s easier to control a partner than an internal group, no matter what the project is.
  2. The partner should be able to help you say no to inevitable scope-creep, or at least maintain a harder line on phases.
  3. As in the above example, the partner will have experienced all the various technology challenges, and will have ready solutions.
  4. Existing software for various parts and pieces of the system will already exist. There will be no need to develop and test new code.
  5. Look-and-feel aesthetics, site architecture, work-flow, data-feeds and best-practices are all in place with minor tweaks and customizations with a partner.
  6. A partner will no doubt think of new things for the site that the internal folks would never get to because they are so bogged-down in the tactical stuff.
  7. Politics typically don’t cross the corporate office threshold, so the partner is usually much more insulated from political decisions that wreak havoc on a project.
  8. Inevitable personnel changes don’t impact project continuity, given the right technology partner.
  9. Other projects in and around the backend system suffer because the vital internal resources are diverted for too long.
  10. Costs — all these items translate into money. ROI of previous projects should drive future projects. Two years and an entire team? Yikes! Seven figures for sure.

But everyone has to take their turn in the barrel and go over Niagara Falls. The good news is that a lot of carriers did the internal Web dev trial-and-error gig the last several years. Now their ready to get it right!


I recently got a call from the new CEO of a mid-sized life and health carrier. He had recently taken the helm at his company. Previously, among other stops in his career, he had been with an IdeaStar client during a time when we were developing a new agent-driven health insurance quote-through-issue Web site. While he had not been directly involved in the IdeaStar insurance tech project, he had peripheral knowledge of it and had heard good things about our work.

I write about this because it seems that this is one of the most common ways that Web development happens today at health and life insurance carriers in the small and mid-sized class. A new guy (or gal, but quite frankly, mostly guys — that’s a whole ‘nother issue) takes over the helm, sees the obvious elephant in the middle of the room that everyone had ignored under the previous administration (like 50% of the producers screaming for “a better way,” i.e. Web-based processes) and says, “This is an easy fix. We’re gonna’ get this done right now. Anyone not on board with this, get off the train. And by the way, we don’t have time to re-invent the wheel in-house — I know a perfect group to partner with…”

And you know what’s going to happen? Very positive results will start to surface in about 12-18 months (assuming that carrier has the underlying competitive products to offer the market, a good reputation for agent and customer service, and a good A.M. Best™ rating). If the online system is designed and engineered properly, producers will be fed a new source of leads by leads engines like Norvax™, they will then be able to Log In and generate quotes, prospective insureds will be able to sign the applications and forms electronically, and the administrative process will flow electronically from there. Again, with intelligent information architecture, in about 12-18 months, the carrier will have more producers, more apps coming in per producer, cleaner apps arriving that fit the carrier-defined underwriting profile, much faster and lower-cost policy-issuance processes, longer agent and policy holder retention, an improving A.M. Best™ rating, and major gains in shareholder value.

Yes, e-business struggled in the late 90’s as we tried to “figure it out.” And I completely understand the post-9/11, two- to three-year adverse economic environment in the insurance industry with regard to IT dollars and initiatives. But I want to encourage all senior insurance executives out there: Now is the time for E-business Action. Move! And don’t let your IT department re-invent the wheel. Fund these projects out of previous project ROI — prioritize and execute. GO!!

Archives to 2005