Insurance Industry Shows Low Regard for Customers, Study Asserts

For a sector that prides itself on providing reassurance and protection in times of trouble, the insurance industry is surprisingly weak when it comes to responding to its policyholders and securing their data, according to a new survey by The Customer Respect Group (CRG). The report, "Online Customer Respect Study: Insurance Companies, August 2004," finds, for example, that 17 percent of firms provide no acknowledgement of receipt of any inquiries, and that 27 percent fail to respond to any online inquiries whatsoever. The survey compiles results from CRG's examination of 72 insurance companies' Web sites, using a 10-point scale to rate firms on several fronts, including transparency, responsiveness, and privacy, along with an overall rating. Responsiveness was the insurance industry's worst performance, and its score there--3.4--places it right near the bottom of the 14 industries CRG covers, according to company president Roger Fairchild. Fairchild calls the results "discouraging." He says, "It seems to me to be a real waste of opportunities" that insurance companies put so much time and energy into developing Web sites, and then when customers make inquiries the insurers don't respond properly. CRG's survey also takes note of how insurance companies handle policyholders' data--not only how (and with whom) each firm shares that data, but whether policyholders are informed of the practice, and whether they are given the opportunity to manually opt in or out. Fairchild calls a prominent privacy policy one of the most important considerations in online service. "That's a very common best practice," he says, "and one of the first things that many online users indicate that they're interested in" when it comes to selecting the companies they deal with online. Fairchild adds that all such policies should be "easy to find, very well structured, with clearly defined individual sections, and written in laymen's terms." According to CRG, 93 percent of firms have some kind of privacy policy on their sites, but five companies display no privacy policies whatsoever: Auto-Owners Insurance Group, Federated Mutual Insurance, LandAmerica Financial Group, MBIA, and Old Republic Life Insurance. Not all of the five companies agree with CRG's findings, however. Informed by CRM magazine of the survey results, Liz James, vice president of corporate communications of MBIA, called the survey "incorrect." She says that MBIA posts its privacy policy, and has a link at the bottom of every page labeled "Terms & Conditions" that leads to a page containing the policy. "I suppose we should add 'privacy policy' as well," James says, referring to those links. (Other companies refused to comment or were unavailable.) In response, CRG spokesperson George Cohen says that CRG "selects the site at each insurance firm that it feels is most appropriate." In its methodology, CRG notes that often it surveys the Web site of a relevant subsidiary rather than that of the parent company. The actual MBIA site it used for its study was themunicenter.com, which, according to Cohen, does not have the universal privacy-policy link James describes. CRG also finds that as a whole, the insurance industry operates without sufficient regard for protecting customer data. While 86 percent of the company sites visited utilized Web forms for submitting personal information, only 34 percent of them provided fully secure versions of all forms, according to CRG's data. Additionally, the percentage of insurance firms that explicitly state they're sharing customer data with outside entities jumped from 35 percent to 60 percent in the six months since CRG's previous survey. "Companies are being more clear in their policies, so it's become more clear what their policies are," Fairchild says. In other words, for some firms, as transparency has improved, the inadequacy of their privacy policies has come to light. Fairchild ascribes this failing to "a lack of sophistication." The lowest-scoring insurance firms, he says, "probably put a Web site up [only] because it seemed like something they needed to do, but they're not sophisticated enough to really understand how it's supposed to function." It's critical, he adds, that these firms revisit their online service policies "to capture the potential revenue that they're missing and help them retain the customers they do have." Fairchild claims industry statistics support the value of quality online service. "Ten percent of all revenue is initiated by a visit to a Web site," he says, and that "could be 25 percent higher if all best practices are in place." Among those practices, he says, are follow-up emails to online inquiries, which he considers a good indication of high-quality online service. "If you're going to take the time to respond," he says, "you should take the time to make sure [your response] was relevant to the question." Additional results from the study include: How quickly do companies respond to online inquiries? 15% Within 1 hour 23% Within 4 hours 31% Within a day 18% Within 2 days 13% Over 2 days How is personal data used? 17% Only for a given purpose 9% Internal marketing 24% Share with affiliates 36% Share with business partners 12% [Policy is] Not explicit enough 2% Do not collect or use data How much do consumers care about online privacy policies? 0.4% Don't care 4.0% Don't look at the privacy policy 13.6% Read the privacy policy sometimes 22.4% If they don't have a privacy policy I don't provide information 26.6% If I am not happy with the privacy policy I leave the site 29.8% I look for secure (SSL) sites 3.2% I usually input false data Related articles: Ensuring the Success of Insurance Companies Insurance Firms Eyeing CRM A new Aberdeen Group report says interest in CRM among insurance providers is on the rise. Companies and Consumers Clash on Privacy Issues A new Accenture survey reveals a wide gap between U.S. business and consumer perspectives on privacy and trust.