Growing Your Business One Link at a Time

By Stephanie K Jones, Insurance Journal, 5/19/2003

Ah, the Internet. Where would we be without it? Web sites and e-mail are pretty much essential ingredients for a successful business these days, especially for sales-oriented organizations. There are a myriad of ways agents can put their computers to excellent use simply by utilizing the linking phenomenon that allows Internet users to move from one place to another on the World Wide Web.

In 1996, only eight percent of independent agents were connected to the Internet but by 2000 access was nearly universal, according to the Independent Insurance Agents & Brokers of America. The IIABA’s 2002 Agency Universe Study reported that by 2002 agents were not only connected, 78 percent of them had high-speed access through DSL or faster technologies It also noted that 85 percent of agencies use the Web to obtain quotes from carriers or from Internet-based market access providers.

Niche markets seem to be making the most of Web technology. Insurance intermediaries from purveyors of auto insurance for Mexico travel to providers of access to multiple carriers of small business insurance have developed creative ways to keep the agent in the loop when it comes to Internet sales.

Viva Mexico

"A week ago someone called wanting some Mexico insurance, they live in Dallas. So I told to them to go on my Web site," said Londa McKenzie, owner of McKenzie Agency Inc. in Odessa, Texas. "Without even having seen the person, or being hundreds of miles away, they were able to get insurance through us. And that’s something you couldn’t do in the past."

McKenzie was speaking of her utilization of International Insurance Group’s online technology for distributing Mexico insurance (www.mexicoinsuranceonline.com), which has a program that lets authorized agents place a banner on their own Web site that links their customers directly to Mexico Insurance Online. In effect, the agency’s customers purchase the insurance online via that banner link and the sale will show up on the agency’s commission report, with no real interaction having taken place between the customer and the agent for that transaction. The agent also receives an e-mail notifying them of the sale.

According to Jim Labelle, president of Flagstaff, Ariz.-based International Insurance Group, the service is "really a protection for agents," and it is available to MGAs as well as agents. Agent-clients of the MGA can access Mexico Insurance through the MGA’s Web site via a user name and password and the policy is printed at the agent’s desktop. Both the MGA and the agent get a commission.

Mexico Insurance Online insures all kinds of vehicles, including RVs up to $400,000. They also insure caravan companies that take RV caravans into Mexico. Woods said caravanning into Mexico is a big trend these days, noting that the company wrote 700-800 such policies last year.

Labelle said the banner-on-the-agent’s-desk-top technology has been so successful, International Insurance started a Web development company, www.internetsoftwaredesigns.com, to create systems for outside providers to sell other insurance products.

By land, sea or air

Insurance for Mexico is by no means the only game in town when it comes to niche insurance markets making use of Web-based sales opportunities. Ray Markley, President of InsureCargo Insurance Services Inc. in Huntington Beach, Calif. (www.insure-cargo.com), explained that his company has been providing agents access to real-time trip transit and open cargo policies online since 1999, on behalf of insureds all over the world.

"What the real-time system does on InsureCargo is provide insurance for that one container, or less than container load, one shipment for minimum premium of only $25," Markley said. "And (agents) can also do that in real time with no negotiating back and forth by following about three screens, taking some geo-graphical information, what the goods consist of, the valuation and how it’s getting there— either by ship or by air or by truck."

Markley said InsureCargo’s open cargo policy business accounts for most of the com-pany’s Internet transactions. While quoting and binding of that policy are not "real time" trans-actions, Markley attributed the program’s suc-cess to the convenience of the "one stop shop." The open cargo policy, he explained, "insures many shipments from the same shipper on one policy. And that policy is either an annual term policy or it can be a continuous until-cancelled-policy, depending on the insurer.

Although agents may receive quotes through InsureCargo.com, in order to place business a broker agreement, available on the Web site, must be provided.

Course of construction coverage

Agent contracts, though, are not necessarily required at BuildersRisk.com (www.builder-srisk.zurichna.com), which provides course of construction coverage for builders through Zurich North America companies. As Ryan Schwartz, director of marketing for BuildersRisk.com explained, the product is an "inland marine policy that covers ... the materials delivered to a job site, from the time it’s delivered until the home is turned over to the owner."

He added that while the product has been Web-enabled since 1997 for Zurich Small Business franchised agents, the company decided to take the model and build it "out on a Web site that would allow anybody, regardless of whether they have a contract with us or not, to issue the policy," Schwartz said. "So agents that we don’t have a contract with, they issue the policy from the Internet the exact same way that our contracted agents do except ... we maintain an account current for our contracted agency."

Non-contracted agents are required to provide their state insurance license number, and either a social security number or their agency’s federal tax ID number. For non-contracted agents, the invoice is printed at the end of the policy issuance process.

"The policy is actually effective the day that it’s issued," Schwartz said. "They have seven days to mail us a check or they can pay us online. And if we don’t get the check or money doesn’t clear within seven days, the policy goes through a cancellation process." He added that rarely happens.

"A lot of builders are always in a hurry," he said. "They need to go down to the bank and get their construction loan so they can start the project ... and they don’t always have time to think about their insurance coverage in advance." And they remember on the way to the bank they can’t get the check without a certificate of builders risk coverage. "So the beauty of our system is they can run into an agent’s office and walk out in five minutes with a policy in their hand," Schwartz added.

He said Builders Risk pays "full commission, the same commission that would be paid to a contracted agent using our Web site."

The vast majority of the policies require no underwriting intervention, however, he noted that BuildersRisk.com insures projects up to about $25 million in value. So, coverage for more complex risks that have underwriting questions may not be available to agents with-out a contract. "But a typical home that you’re building, a $250,000 home, it flows right through the system," Schwartz added.