e-Insurance

A long time ago, when I was still typing university papers on an electronic word processor, the Internet was something about which only the U.S. Department of Defence knew.

In its nascent stages, the online experience amounted to scanning static Web pages that displayed only the most basic information. The early Internet experience was very much like wandering through a glorified online incarnation of the Yellow Pages.

There was a lot of hype back then about how the medium was going to democratize personal expression. In the early going, there weren’t many rules about what people could post by way of content. Early Web pages didn’t have the ‘form template’ –including the navigational tab structures we now all know and love. They used to be primitive, anarchic and creative.

In those days, it was still up for grabs whether you could use the Internet to do anything beyond communicating. The Net made it quicker to find a company’s phone number, but that was about it.

Those days have changed. The economy is defined by how people exchange goods and services, and so it’s to be expected that business ultimately ends up where the people are. The people started living on the Net, and so it was no surprise the Internet ultimately went corporate.

Decades later, social networking is a big business now. Facebook is reportedly valued at about $41 billion. Twitter was valued at about $1.4 billion in 2009 and LinkedIn was supposedly worth $2.3 billion as of July 2010. Also, consumers are purchasing more online: eBay, for example, is valued at about $39 billion.

In today’s business environment, social networking is about more than just gaining another means of access to a youth market segment. The Internet has transcended its first evolutionary stage, which was simple access to information and ‘users.’ People are now actually conducting their business online. And it will be imperative for insurers and brokers of any channel to adapt to this transformation in the way of doing business.

One day, if this hasn’t happened already, insureds will be clicking buttons to purchase, review, store, change, obtain endorsements or advice, and text and/or instant message service representatives about their insurance policies. They will not be reading letters mailed to them by snail mail, they will not be showing police officers the pink slips of paper they received in the mail, they will not be faxing signatures back and forth, they will not be talking to representatives at call centres to change or update policy information. They will be able to do all of this while on their mobile devices at the village marina or while hiking in Sudan. Earthquake victims will be texting their insurance company to make a claim when all but their mobile devices go up in smoke.

To the extent insurers and brokers can change their business models to adapt to this digital transformation, they can be assured of their long-term survival. It’s a tough time for insurers, to be sure, because right now they are catering to multiple generations, some of which still long for the traditional way of doing things — handshakes, signatures on paper documents, phone calls.

The Internet is gaining popularity as the model by which business will be transacted in the future. One look at the moment of terror I see on my teenage stepson’s face whenever he discovers the computer isn’t working — that is, before he flips open his cell phone and texts his friends — tells me that as long as the Internet is available, he isn’t likely going to consume anything requiring more than a click of a button. Like it or not, he is a representative of the future generation; cyberspace is where he lives, and he and his peer group will be the future consumers of insurance products.

For the insurance industry, it’s no longer a matter of figuring out how to use the Internet to communicate information about product ideas. It’s a matter of evolutionary business survival.

Simply put: in 10 years, you won’t be making any money if you can’t reach out to the younger generation — and right now, they are living (and will be doing their business) in cyberspace.