December 22, 2000, 1:35 PM — THE SLOW-MOVING insurance industry has woken up to the Web, according to industry analysts and insiders, but the dawning of the e-commerce era means headaches as well as opportunities for the IT professionals supporting insurance companies.
"[Until now], there had not been a lot of incentives for insurance companies to make their businesses more efficient," says Keith Lippiattt, senior vice president of technology at InsWeb, an online insurance marketplace, in Redwood City, Calif.
What's changed for this traditional industry is the emerging pressure from hot dot-com competitors who are coming into the game with new systems built from the ground up to support e-commerce.
For established insurance companies to leverage Internet technologies, their IT professionals face the challenge of updating sometimes archaic and incompatible computer systems and processes. If they want to take advantage of the Web, experts say they'll need to tie together those disparate systems so that all the details concerning each customer can be instantly pooled. And they'll have to ensure that the data is available around-the-clock -- issues that their emerging Internet competitors can offer right out of the starting gate.
All the while, IT leaders must accommodate products governed by complex rules and stiff regulations that vary by state, according to analysts and industry insiders. They must also avoid alienating sales agents who feel threatened by technology, as well as fight inertia within corporations accustomed to the cumbersome, although familiar, paper-based way of doing business.
In addition, the virtual world isn't impervious to physical-world restrictions. For instance, state regulations require customers to sign their policies, and some products, such as life insurance, require physical examinations -- not to mention the difficulties in creating user-friendly systems that appeal to insurance buyers who are used to dealing directly with human beings.
"The insurance industry is one of the hardest financial services to put on the Web," says Steven J. Kroll, senior vice president of marketing at Answer Financial, which provides online insurance policy comparisons and quotes to employers and affinity groups through its Insurance Answer Center subsidiary.
To exchange information with 75 insurance carriers, the Canoga Park, Calif.-based company has to deal with everything from legacy systems to "people we have to send faxes [to]," Kroll says. And like other Internet insurance services, Answer Center backs up its Web site with a call center.