Vien Coelho
University of Auckland, New Zealand
coelhovl@hotmail.com
 

Coelho, V. (2005, May), Insurance Sites Capability Evaluation. Bulletin of Applied Computing and Information Technology Vol. 3, Issue 1. ISSN 1176-4120. Retrieved from

ABSTRACT

Recent research carried out by Booz-Allen & Hamilton on the online insurance sector shows that insurance companies fail to meet the expectations of their site visitors in terms of the functionality and information presented on their company Web site. Therefore sites lack the ability to attract and retain browsers. This paper examines the current situation of the New Zealand online insurance market by evaluating Web sites using a pre-defined Web site evaluation model tailored to the insurance industry in New Zealand.

Keywords

Web site evaluation, e-commerce, insurance

1. INTRODUCTION

Recent research studies have focused on the extent of use of the Internet by various industry sectors such as banking (Paynter and Chung 2004), recruitment agency (Wang, Paynter and Everett 2003) and real estate (Loh, Paynter and Everett 2003). These studies evaluated sites that belong to the industry using a Web site evaluation model developed specifically for that particular industry using content analysis. This paper follows the approaches used by previous studies to examine the use of the Internet by New Zealand Insurance companies. The domain of this study is insurance companies, with Web sites, operating in New Zealand.

The objective of this study is to develop a Web site evaluation model for New Zealand insurance company Web sites by identifying elements and processes that are important to the online insurance sector. The proposed Web site evaluation model will be applied to selected New Zealand insurance company Web sites with the aim of identifying the best insurance Web sites and analysing their performance on the various elements of the proposed model. A description of the research approach is also presented.

2. USE OF THE INTERNET

The Internet provides many new opportunities for businesses in terms of cost savings, wider markets with no geographical boundaries and a competitive advantage. Businesses may use the Internet as a marketing tool, an information channel or an e-commerce site. The Internet has major influences on the industry structure in terms of increased competition, reduced barriers to entry and a shift of bargaining power towards consumers (Porter 2001). These changes in the industry structure alter the process of carrying out business in certain industries. By incorporating elements such as the ability to apply for insurance cover online or to process quotes online in the Web site Evaluation Model, it will be possible to analyse the development of the insurance industry in terms of utilising the opportunities provided by the Internet.

3. PRIOR FINDINGS

A study, conducted by Booz-Allen & Hamilton in 2001, showed that many insurance internet sites did not attract as many visitors as other financial institution sites such as bank and brokerage sites (Anonymous 2001). Various reasons have been put forward for the slow growth of the online insurance industry.

Firstly, the survey identified the need for insurance companies to upgrade the functionality provided on their sites. The study found that while 86% of insurance customers preferred to self-administer their insurance accounts, only 25% of insurers allowed them to do so (Anonymous 2001). This shows that the online insurance sector were not meeting customer expectations and reducing the opportunity to attract site visitors and Internet business.

The study also commented on the time that insurance companies take to respond to email queries. Only 54% of the insurance companies replied to an email response test within one day. A similar test carried out on bank and brokerage sites received a reply from 63% of the sites within one day (Anonymous 2001). If insurance companies intend to use the Internet as a medium of problem solving and as an alternative to call centres then they need to improve their response time.

4. CLASSIFICATION OF INSURANCE SITES

The different insurance companies in New Zealand use their site for a variety of purposes. Conning (cited in Trencher 1999) classified insurance internet sites according to the functionality they provided. The classification includes three categories, namely Company sites, Mall sites and Relationship sites. The first category, Company sites, includes the major insurance company sites that provide information about the company and the products it offers. Mall sites provide information that has been integrated from various sources. These sites aim to reduce search costs and time spent by online consumers by providing competitive quotes and independent agent leads. The last category, Relationship sites, aim to generate sales by advertising on search engines, advertisement banners, links and e-mail (Trencher 1999). The first two categories are further divided into different business models.

Since this study focuses on insurance companies and their Web sites, only the first category in Conning’s classification will be discussed in detail. There are four different business models included in this category, namely:

• Agent Contact/Referral: Under this business model, the site presents basic information about the company and the insurance products it offers. The site may also provide contact details of agents or may allow site visitors to fill in general enquiry forms. An example from the New Zealand insurance industry is Fidelity Life Assurance Company’s site (www.fidelitylife.co.nz).
• Sales Initiation: These sites provide more functionality as they enable site visitors to request online quotes. Such sites may also be used to generate referrals for agents. An example of such a site is AA Insurance’s site (www.aainsurance.co.nz).
• True Online Sales: This business model includes sites that allow site visitors to buy their insurance policies online and may also include online payment functionality. An example is New Zealand Insurance’s Web site (www.newzealandinsurance.co.nz). This site allows shoppers to request quotes online, accept quotes, buy the insurance policy and make payments online. NZI also provides immediate cover to online shoppers.
• Online-Specific Product: In order to attract online sales, sites may offer certain policies e.g. airline travel exclusively for the online market. Currently, examples of this strategy have not been observed in the New Zealand online insurance sector.

 This classification will be used once the Web site evaluation model has been applied, to observe how the different insurance companies use their Web sites.

5. EVALUATION APPROACH

Content analysis is used evaluate and analyse essential elements of insurance Web sites in New Zealand. In order to carry out a systematic and objective analysis of the content of Insurance Web sites, it is necessary to use a predefined evaluation model. A coding scheme will be included in the evaluation model to enable the comparisons of Web sites. A sample of New Zealand insurance company Web sites was collected using the listing of insurance companies from the Telecom New Zealand Yellow Pages and evaluations were carried out in December 2003.

The first part of this study involves the inclusion of aspects into the evaluation model that sufficiently describe the online New Zealand insurance sector. The Hersey’s Web site Evaluation Model, developed by Ian Hersey (cited in Whiteley 2000), is used as the starting point for the development of the model since it includes the general and basic requirements for Web sites. Some elements of the Hersey’s evaluation model will be altered and others added to reflect the nature of the New Zealand insurance industry. Results from other groups like Gomez will be incorporated into the Web site Evaluation Model. A ‘Legal issues’ category is included in the tailored model to assess how well insurance sites comply with the requirements of the New Zealand Privacy Act 1993. A brief description of the Insurance Web site evaluation model is shown in Table 1.

Each Web site will be evaluated by assigning a score of 0 or 1 to each element in the Insurance Web site Evaluation Model. A score of 0 will be assigned if the element is absent and a score of 1 will be assigned if the element can be identified on the Web site.

The second part of this study focuses on evaluating Web sites of New Zealand insurance companies by applying the evaluation model to the site content and observing how the sites perform. The performance of the insurance company sites will be compared with the performance of sites in similar industries to analyse the progress of insurance company Web sites.

6. FINDINGS

This section will describe how closely the Web site content of the insurance Web sites match the elements in the Insurance Web site Evaluation Model. The results show that information describing the history of the company and the company’s credit rating is a common aspect among insurance sites with 95% and 85% of the sites displaying such information. All of the sites provided information about the company and the company’s contact details. Potential customers would expect such information to be readily available and are factors that are considered essential when purchasing insurance cover.

The ‘Information Requirements’ element of the customer category has to be considered with elements from other categories. This is because not all sites have a high level of functionality. Some insurance companies use their sites mainly as advertising tools and present information on their policies without allowing a visitor to purchase cover online.

85% of the sites provided information relating to the types of policies the company offers. Most of the sites present comparative analysis of the benefits and features of their products. This suggests that majority of the insurance companies in New Zealand use the Web as a medium of advertising their products. However, only 30% of the sites evaluated included detailed insurance policy documents. Potential customers review policy documents in order to get a better understanding of the policy and any terms and conditions attached to a particular product. Limited policy information may deter potential customers from buying insurance cover online.

Only 35% of the sites that were evaluated had online quotation systems that allowed site visitors to request quotes. 25% of the quotation systems calculated the insurance premium quotes immediately and presented this information to the site visitor. 20% of the quotation systems allowed system users to alter the details provided to calculate the quote and 20% of the quotation systems provided quotes without requiring users to enter any personal details. This shows that insurance companies are not taking the opportunity to attract new business through their Web sites.

The ‘Insurance Application Process’ category deals with the e-commerce functionality that insurance Web sites may provide. Only 25% of the Web sites evaluated presented information on how to apply for insurance cover. 40% of the sites allowed site visitors to download application forms. But only 25% of the sites provided visitors with the functionality of submitting the completed forms through the Web site. AMP Insurance and NZI Insurance are the only two sites that provided site visitors with a high level of functionality by allowing them to pay their insurance premiums online.

Only 25% of the sites evaluated presented information on the claims procedures. Potential customers may be interested in assessing the quality of after sales service by viewing the claims procedures of the company. 35% of the sites allowed site visitors to download insurance claim forms but only American Home Assurance Company allowed site visitors to submit forms through their Web site showing a higher level of functionality.

Although 85% of the sites presented product information to site visitors, only 65% included a legal disclaimer as part of their Web site. Only 55% of the Web sites displayed a privacy policy. While sixteen of the sites that were evaluated collected information directly from site visitors, only eleven sites displayed a privacy policy. This means that some sites do not comply with the requirements of the New Zealand Privacy Act 1993. 20% of the sites displayed a security policy that explained the security measures taken by the company to protect customer information being transmitted to and from the site.

In terms of ease of use, all sites performed well. Only 55% provided a site map. This may be because most of the Web sites were made up of a few pages and did not require site maps to enable better navigation. 70% of the Web sites that were evaluated allowed site visitors to fill in general enquiry forms in case they had issues that needed clarification. In some cases, sites allowed visitors to request assistance from brokers with whom the company dealt with by completing information request forms.

55% of the sites had a FAQ or advice section and only 15% provided definitions of insurance terms on their Web site. This shows that insurance companies still rely on customers reading policy documents. 95% of the sites detailed the affiliate programmes to which they belong. These include FlyBuys programs, AA Rewards, membership to the Insurance Council of New Zealand (ICNZ), Insurance & Savings Ombudsman and Investment Savings and Insurance Association (ISI).

On the whole, the results show that insurance companies use their sites mainly as information and advertising mediums and only a few sites take advantage of conducting business online. The highest possible score is 31. The overall scores range from 9 to 27 with a mean score of 16. The top eleven insurance company sites are listed in Table 2.

7. DISCUSSION

7.1 Top Three Sites

The top three sites allowed site visitors to requests insurance premium quotations online and provided them with instant quotes. These sites also allowed site visitors to purchase insurance cover online. Out of these three sites, only Toyota Financial Services allowed customers to lodge a claim application online.

7.2 Application of Conning’s Classification

Conning’s classification of insurance sites described earlier will be used to observe the level of functionality provided by Web sites. All the sites can be classified as information sites. Only seven sites (AA Insurance, AMI Insurance, AMP Insurance, NZI Insurance, Pinnacle Life, State Insurance and Toyota Financial Services) can be classified as sites that adopted the ‘Sale Initiation’ business model as each of these sites included a quotation system and information about their products and policies.

AMP Insurance, NZI Insurance, Pinnacle Life, State Insurance and Toyota Financial Services use their sites to sell insurance policies and services and can be classified as adopting the ‘True Online Sales’ Model.

7.3 Comparison of Industries in the Financial Services Sector

The results obtained so far will now be used to compare the insurance industry with other industries in the Financial Services sector. The results from previous studies by Paynter and Chung (2004) and Paynter, Lu and Everett (2003) which evaluated Internet Banking sites and e-Mortgage sites respectively, will be used to carry out this comparison.

The following categories from the three studies (as shown in Table 3) will be used in the comparisons since they reflect similar aspects of the Web sites. While some components are identified as categories in one model, other models treat them as elements. Therefore this analysis will use the Insurance Web site evaluation model categories as the basis of the comparison. The following table specifies the various elements that will be included in the category comparisons.

All Internet Banking sites included information on the company. The e-Mortgage and insurance company sites ranked second and third, respectively. The scores for this category are high showing that company information is a basic information component of sites in the Financial Service sector.

The Customer Information category comparison relates to the degree of functionality of the sites. That is, sites that collect information from visitors are more likely to provide users with the ability to carry out online transactions with an insurance company. For example, a site may allow visitors to complete forms online. These forms could relate to online purchases, enquiry requests or online payments. The statistics show that most of the Internet Banking and e-Mortgage sites collect visitor information while only 38% of the insurance company sites collect information from site visitors. This shows that insurance company sites offer a low degree of functionality compared to Internet Banking and e-Mortgage sites. The New Zealand online insurance industry closely reflects the global trend observed by Booz-Allen & Hamilton (Anonymous 2001) in 2001. Greater functionality and a wider range of services are required to attract and increase the use of online services.

The Product Information category relates to whether a site displays information on the products and services the company sells or provides. Customers rely on detailed financial information when deciding whether to transact with a company. If companies wish to sell their products online then it is essential for the site to provide visitors with adequate financial information and the ‘fine print’ of the contracts being entered into. For example, detailed policy information is essential and sites must allow visitors to browse through policy documents if they wish to sell their insurance service online.

All of the Internet Banking sites and most e-Mortgage sites present product information. 58% of insurance company sites provide details of their products. More insurance companies need to take advantage of the growth of e-commerce and the Internet to promote the services they provide.

New Zealand Web sites have to comply with the New Zealand Privacy Act. Since the studies being used in these category comparisons focus on the New Zealand Financial Services sector, the industry with the highest degree of compliance can be identified.

Most Internet Banking sites include privacy and security policies and legal disclaimers. However, low percentages of insurance company and e-Mortgage sites include such statements. Companies need to place more emphasis on legal issues, not only to comply with New Zealand legislation, but to also reduce privacy concerns of online browsers (Du, 2004).

7.4 Online Sales Functionality

Other comparisons that will be carried out will analyse the e-commerce functionality provided by the Internet Banking, e-Mortgage and insurance company sites. The elements from the three Web site evaluation models and the number of sites that reflected these elements are displayed in the table below.

The percentage of sites that have adopted the ‘True Online Sales’ Model is low in all the three industries. Eleven e-Mortgage sites provided e-commerce functionality and five of the insurance company sites allowed visitors to purchase cover online. Only one site out of the ten Internet Banking sites allowed site visitors to open accounts through the site.

Banks, lending institutions and insurance companies may not be willing to conduct e-commerce transactions because of the risks involved and possible fraud that could affect the company. Identification is required when bank accounts are opened and lending institutions require a variety of documentation such as a Sale and Purchase Agreement and payslips of the applicant. The size of the New Zealand market may be another reason for the lack of investment in e-commerce sites.

7.5 Day-to-Day Transactions

Increasing the efficiency of processes is one of the opportunities provided by the Internet. Incorporating day-to-day transactions into the company Web site frees up resources and reduces the time and cost of carrying out these transactions for the consumer as well as for the company. For example, allowing customers to transfer funds between accounts through the Internet Banking site reduces transaction costs since bank staff are not directly involved. Customers save time, as they do not have to visit a bank branch to carry out the transaction. Comparisons will be made between the three industries to observe the level of online functionality they offer to customers. The elements from the three models that will be used for this comparison and the scores of these elements are listed below.

The elements from the Internet Banking study that will be used in this comparison are:

The ‘Online Loan Servicing’ element from the e-Mortgage site Evaluation Model will be used for this comparison. The percentage of sites that included this functionality is 22.86% (eight sites). This element includes the following:

• Check your loan balance and details
• Review your complete loan history
• Request interim statements
• Schedule additional payments
• Request redraws

 The elements from the Insurance Web site evaluation model that will be used are:

The statistics show that bank customers are able to carry out more day-to-day transactions online than customers using e-Mortgage sites or insurance sites. A higher number of Internet Banking sites provided the functionality that was evaluated in the Internet Banking Site Evaluation Model. Thus e-Mortgage and insurance company sites can improve the services they provide to their customers in order to attract more business. Customers may insure with a particular insurance company if they find that it provides an efficient method of carrying out day-to-day transactions, such as making online payments or updating personal details.

8. LIMITATIONS OF THE STUDY

The evaluation of the Web sites was carried out by only one person and personal opinions may have influenced the results – no tests could be done for inter-rater reliability. It could be argued that results of the evaluation carried out by another individual may differ from the results of this study. Thus there may be no reliability of the findings of the study.

The Web site evaluations carried out as part of the study measures the performance of the sites at a single point in time. The information presented on a site as well as the functionality provided may change over time. Thus the results of this study may not be relevant once these changes occur. Further studies are needed to track the progress of insurance Web sites.

The elements of the Insurance Web site evaluation model were made up of elements from the original Hersey’s Web site evaluation model and the Gomez Scorecards criteria. Interviews with experts in the insurance field would have increased the effectiveness of the evaluation model.

9. FUTURE WORK

This study could be extended in the following ways:

à User perceptions could be incorporated into the evaluation model through surveys. This study tried to identify elements and aspects of insurance company sites that are important and equal weightings were assigned to each of the elements in the evaluation model. A survey of site visitors could be used to analyse how they perceive each element in relation to another. These user perceptions can be included in the Evaluation Model in the form of element weightings. However it was noted by Satikit (2001) that changing the weightings made no impact on the overall findings.

à Experts from the New Zealand insurance industry could be interviewed to provide insight into the New Zealand insurance industry and the status of the online insurance industry in New Zealand. For instance, this was done in the e-mortgage study. In this way, the model would more closely reflect New Zealand insurance Web sites.

à This study focused on insurance company Web sites. Possible future research could develop a Web site evaluation model for insurance broker Web sites. The results of this study can be compared with the evaluations of the insurance broker Web sites. These comparisons would help in identifying the change in the role of insurance brokers, that is, do they continue to act as an intermediary or do they now act as an information channel?

10. CONCLUSION

This study was the first one to analyse New Zealand insurance company Web sites and it follows the path of previous content analysis research undertaken. The results of the evaluation show that few insurance companies use the Internet as an additional source of business. The New Zealand insurance sector uses their sites mainly as an advertising tool or an information channel. Twenty sites were selected from the 2003 Yellow Pages and were evaluated using the model developed. The top three sites (New Zealand Insurance (NZI), State Insurance and Toyota Financial Services) allowed visitors to request quotes online and provided instant quotations based on the information provided. These sites also have the ability to purchase insurance cover online. These sites treated their online customers like offline customers and provided them with detailed information on the products and policies they offered. The sites that received the lowest score of 9 were mainly information sites that provided information on the company and the methods of contacting insurance agents.

The online insurance industry performed poorly when compared with industries (that is, the Internet Banking and e-Mortgage industries) in the Financial Services. Insurance companies scored poorly on the Customer Information Category Comparison due to the lack of Web site functionality. Insurance companies should use their sites as an advertising medium by presenting information on the policies and services that they offer. Only 47% of the insurance company sites met the legal requirements category of the model. This is low compared to the other two industries studied in the Financial Services sector. Insurance companies need to present Privacy policies and disclaimers to increase trust in their online brand

On the whole, insurance companies have the opportunity to improve the functionality provided on their sites. Insurance companies can use their sites to increase their efficiency and effectiveness when dealing with customers.

REFERENCES

Anonymous “Booz-Allen Survey Reveals Gap Between Internet Insurance Offerings and Customer Needs," 2001.

Du, B. (2004) “Consumer Trust in E-Commerce: A New Zealand Perspective”, Unpublished Masters Thesis, University of Auckland.

Loh, F., Paynter, J., and Everett, A. "New Zealand Real Estate Agencies in e-Commerce Environment," The Third International Conference on Electronic Business (ICEB 2003): E-Business Paradigms: Strategic Transformation and Partnership, Singapore, 2003.

Paynter, J., and Chung, W. "Retail Internet Banking in New Zealand - how do newcomers stack up?," Innovation: Management, Policy & Practice (6) 2004, p (Forthcoming).

Paynter, J., Lu, X., and Everett, A. "An Analysis of e-Mortgage Sites in New Zealand," The Third International Conference on Electronic Business (ICEB 2003): E-Business Paradigms: Strategic Transformation and Partnership, Singapore, 2003.

Porter, M.E. "Strategy and the Internet," Harvard Business Review (79:3), March 2001, pp 63-78.

Satikit, S., and Paynter, J. "Usability of New Zealand e-tailing Sites," Proceedings of the Australian New Zealand Marketing Association Conference, Auckland, New Zealand, 2001.

Trencher, M.L. "Insurers Face a Web Of Internet Options," National Underwriter (103:39), 27 September 1999, pp 22-25.

Wang, X., Paynter, J., and Everett, A. "An Investigation of New Zealand Recruitment Agency Web Sites," The Third International Conference on Electronic Business (ICEB 2003): E-Business Paradigms: Strategic Transformation and Partnership, Singapore, 2003.

Whiteley, D. E-Commerce Strategy, Technologies and Applications McGraw-Hill Publishing Company, England, 2000.

Copyright © 2005 Vien Coelho
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