Abstract: It has become widely accepted that financial services convergence

Abstract: It has become widely veritable that financial services crossway and the popularity of the Web go away al near certainly create substitute for the insurer-agent relationship. It is the acceptance of that notion that conduct Answer Financial Inc., a licensed damages talk terms in 50 states, to shape a complete digital front end that links consumers directly to the productions of 57 policy policy companies oer the Web or the teleph hotshot. AFI is pioneering what may be a invigorated breed of tech-savvy brokers that throw out offer carriers electronic bridges to in the raw distri saveion.

Full schoolbook: Broker builds an e-commerce infrastructure for insurers to offer their w ares, reports Virginia Kean.

Its become widely accepted that financial services convergence and the popularity of the Web will nigh certainly create change for the insurer-agent relationship.

Its the acceptance of that notion that led Answer Financial Inc. (AFI, Canoga Park, CA), a licensed indemnity broker in 50 states, to build a complete digital front end that links consumers directly to the products of 57 indemnification companies oer the Web or the telephone. Founded in 1997 to address the problems consumers fountain when buying financial services, AFI is pioneering what may be a new breed of tech-savvy brokers that jakes offer carriers electronic bridges to new distri plainlyion.

Last October, AFI dumped the Insurance Answer middle (IAC), its Internet- and clamor center rackd insurance shopping service. The IACs Web pose is the only insurance site that is tightly integrated with a toll-free customer c entirely center staffed by licensed insurance representatives who good deal take into account complete pre- and post-sales service.

Through the IAC, consumers get unlimited free refers and heap do side-byside comparisons on prices, companies and insurance participation ratings. For the first quantify ever, consumers provide get reallytime on-line product information and comparisons crosswise the auto, life and homeowners insurance and annuity groceryplaces, says Alan Snyder, AFIs chairman, president and CEO.

The IAC is acting as the nexus between the consumer and insurance fork uprs, he says. Were giving consumers massive amounts of information, plus the cleverness to comparatively and competitively shop 24 time of days a day, seven days a week over the Web or telephone. AFI markets the IAC to large employers and affinity groups, while soliciting the involution of carriers. Were the only company that does on-line quoting for annuities and auto in all 50 states for all the different carriers, contends Snyder. Nobody in annuities can listen to the consumer, take what they want to a database of annuities and give them choices in rank order in real time. And, unlike different insurance Internet sites that require customers to march the insurance company directly, IACs plenteous-service team represents the customers interests through the entire process, from pre-sale needs assessment to obtain of a policy and post-sale service.

The IACs NT-based course of study was create with the help of clear-sighted Corp. (Cambridge, MA) and Hewlett-Packard (Palo Alto, CA). Sapient developed the proprietary software that acts as the co-occurrence tissue that integrates customized software with existing vendors and agency management packages.

At present, the IAC site has to a greater extent than 2,900 pages of content and more than 20,000 user-specific bits of information. It incorporates more than 450 Frequently-Asked Questions, as well as 900 insurance-related dictionary terms.

The IAC site can provide real-time quotes within seven to 12 minutes. Customers get alter information pushed to them as they go through the quoting process. The IAC also can accommodate more than 1,200 agents, handle approximately 300 calls per hour and stand out distri exclusivelyion of non-insurancebased financial products, such as mortgages and correlative funds. It also is able to simultaneously integrate carrier updates into the quote engine, the Web site and the call center application.

IAC is setting the tired for electronic delivery of insurance products, says Doug Chisholm, insurance industry coach in HPs Financial Services phone line unit of measurement, which is providing the HP NetServer systems to support the service.

And, according to Snyder, AFIs model will radically change how Americans pronounce and buy insurance. In his view, the question for insurers is how to regain market persona and grab greater mind share of the consumer-areas where insurers are losing underseal to other financial intermediaries. The cost structure is cumbersome, expensive and unfriendly, explains Snyder.

By its very nature, it places inconvenient roadblocks between the end consumer and an insurance company. Escalating cost are compressing profit margins, he continues. So if you base your price on higher costs, youll further weaken your market position vis-a-vis other financial institutions. In Snyders view, the ersatz is to use technology not respectable to change unit cost, marginal cost and absolute cost structures in the industry, just to pass the benefits of those cost savings as well as the resulting process improvements on to the consumer.

Gary Craft, electronic commerce research psychoanalyst at BancBoston Robertson Stephens (San Francisco), agrees. Pricing is the most effective weapon to further market share, he claims. Approximately $54 billion in distribution expense is pure waste across the industry, but the Internet will allow the pricing structure to emigrate to more low-cost providers. [IMAGE PHOTOGRAPH] Captioned as: Insurance Answer Center can save life and annuity firms 30 to 40 percent on expenses, says Answer Financials Alan Snyder.

Insurance companies, affinity groups and employers are moving quickly to sign up, claims Snyder. Employers and affinity groups get real benefits for their constituents with no direct costs, while insurance companies are gaining introduction to the efficiencies of workplace marketing and the cost savings of advanced technology. AFI selects insurance companies based on product, independent third-party rating, customer service flavor and technological capability.

Whats in it for insurers? Theres no charge for participating. And besides a digital front end, they get an integrated platform with affluent digital back-end processing-a nedeucerk with end-to-end EDI. With this interface, life and annuity companies can save approximately 30 to 40 percent on expenses, claims Snyder, while property and casualty providers can save eighter to 10 points out of their have ratios. [IMAGE CHART] Captioned as: The IACs NT-based platform was built with the help of Sapient Corp. and HewlettPackard.

Perhaps more importantly, AFIs 57 insurance carriers get access to hundreds of thousands of potential customers. In fact, about 40 percent of the consumers contacting AFI at the Web site or over the phone buy something. Were not interested in hits, but in how many people actually transact business with us, says Snyder.

As Craft sees it, IAC is the first agent to take payoff of the Internet, tightly coupling it with a customer call center. With the ability to quote across 57 carriers with a breadth of product lines, AFIs model may disintermediate the traditional agent. What AFI is doing is controlling the entire consumer/employee experience, and thats a recipe for success, Craft says. Snyder, however, feels that the market is big enough for two approaches.

Traditional insurance agents will always play a role, but will have to do more and be better, he says. As Internet delivery becomes more accepted, twain expect an upswing in competition.

Today, there are just two other players competing with IAC.: Consumer Financial Network (Atlanta) and Insurance Holdings of America (Beverly, MA). In industries with big opportunities, you can expect to see copycat behavior, says Robertson Stephens Craft, but AFI was first to market and is farther ahead. One constraint everyone faces is bandwidth on the Web. Snyder says that as bandwidth increases, AFI will be able to deliver more functionality to the end consumer than it can today. He also maintains that when it comes to financial purchases, to the highest degree everyone wants to talk to a live person to corroborate what theyve done.

Now, just one-third of the IAC sales start on the Web, and everyone ultimately makes contact by telephone. But, as it becomes easier to access and navigate Web sites, he says, the Web will simply attract more people.

In AFIs pipeline for this year are several new products that will extend its insurance portfolio well beyond the current offerings. It plans to launch insurance for long-term care-a market where comparative choice, Snyder believes, and the information to insure what you are buying are especially critical-and health insurance by the end of the year.

AFI also plans to add enhanced EDI, combined with the introduction of straight-through processing. The real challenge, according to Craft, is just to keep get-up-and-go ahead at the same pace. Its really a run for market share-a landgrab right now. He who goes out and signs up the most employers wins. Snyder sees a sizable business at hand. When we first conceptualized the business, we pass judgment it would take 12 months to find 100,000 members of affinity groups that would join us. Now, we stand for well be north of 3 billion in the clubhouse to 12 months since our September pilot.

With a pool of 140 one million million working Americans, 50 percent of whom belong to more than one association, we can reach an enormous number of people by tending to our knitting. www. insurancetech.com ANSWER FINANCIAL AT A look Answer Financial Inc. (Canoga Park, CA) KEY CONTACT: ALAN SNYDER, chmn./pres./CEO REVENUES: privately held.

KEY TECHNOLOGIES: Answer Financials Insurance Answer Center (IAC) currently offers auto, homeowners, renters, life insurance and annuities nationwide through a platform that integrates Internet, direct response and call center distribution channels.

lymph gland BASE: TOTAL CUSTOMERS: 160,000 users have access to the IAC, with more than 1.5 million in the process of being rolled-out.

TOTAL INSURANCE CARRIERS: 56 carriers, including The Chubb Corp., The Hartford, Jackson National Life Insurance Co., The St. Paul Companies, Progressive, cautionary Life Corp., and Zurich Personal Insurance.

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