News & Commentary

From the October 2001 issue of Sounding Line, by Steven Brightbill*

Cyber Security a Hot Topic

Even before September 11, Internet and cyber security were hot topics. Code Red and Nimda worms have been recent threats, and a host of other viruses and malevolent threats have preceded them. But in the wake of September 11, a variety of security-related topics will receive priority attention. Depending on the publications your read and the Internet-resources you receive, hardly a day goes by without some news item that addresses cyber and Internet security. Here are three trends to watch.

Government involvement in privacy matters: Internet and communications providers have been spearheading a number of initiatives to keep government involvement to a minimum. Watch for increased attempts at government regulation and involvement. Some restrictions have already been implemented and more are bound to materialize (see next news item).
Increased sales pressures to buy security products: If you're online, you'll increasingly become the target of e-mail and other advertising urging you to buy this new security product, that new technical fix, or any number of computer and network protection devices and software. To be sure, the cost of protecting your technology resources will be increase, and you may want to make budgetary adjustments now.
Cyber insurance rates will increase: If you have insurance coverage for your technology resources or sell such insurance to your customers, expect an increase in premiums. The October 1 issue of Interactive Week reports that several carriers, including Chubb, Zurich Surety, and Insuretrust.com are raising premiums 20 to 40 percent.

IIAA's Trusted Choice Now Available

As promised for some time, the Big I recently rolled out its new Trusted Choice initiative, a new marketing brand that was developed in response to its widely circulated, commissioned consumer research study (the "Addison" study) of over a ago. The goal of the new initiative, among other things, is to better convey the value of an independent agent to consumers.

Use of the new marketing brand entails an additional fee of $250 or $499 (depending on agency size) and a pledge to commit to certain performance standards. The program is available to IIAA member agents only and is voluntary. The current IIAA logo will still be used. The new program will be featured at the IIAA's annual convention in late October, and complete program elements, including a new agency locator feature, are expected to be in place in early 2002.

IIAA's efforts to promote Trusted Choice have not been met without reservation or criticism. Some have said that a voluntary program without measurable and verified performance standards renders the initiative as relatively meaningless. Others have complained that an additional fee, over and above membership fees, seems more like a revenue-generating scheme instead of a true service. Already, some have questioned the purpose and intent of the "rhinoceros" graphic in its current display ad appearing in industry publications.

Regardless of preliminary reaction, time will tell regarding acceptance of this new initiative — both by the agents who might use the Trusted Choice brand and by the insurance consuming public who must favorably perceive its meaning and value.

IVANS Study Interesting, But…

A recently released IVAN's study makes for interesting reading, but, in our opinion, needs to be viewed cautiously within the larger insurance industry context. The study is called "Emerging Strategies in Insurance & Technology," which is something of a misnomer. The study does cover insurance and technology, but is in reality the findings of a survey of insurance technology executives who responded to a number of questions about the implementation of new technology and related Web-related issues. In other words, the survey asked questions that are more of a "what-are-you-doing" nature than of a "what-are-your-future-plans" slant.

The primary disappointment in the survey, however, is not the intent, not the questions asked, nor the results concluded. Rather, it's the dismal response that IVANS received to its otherwise good intent and effort. Typically, a respectable study spells out its methodology, and this study did. IVANS mailed 750 surveys to insurance company executives in IT departments in a stratified random sample. The survey was mailed July 30 and collected until August 30. Only 80 responses were sent back — barely 10%!

Despite the meager response, IVANS several key findings are worth noting. First, only 15 percent of the responding insurance companies report using the Internet to sell insurance policies. On the other hand, 17 percent strongly agree and 51 percent agree that their Web site is a sales vehicle.

Second, most companies report that they are upgrading their existing legacy systems to better support their agents. And third, while many in the insurance industry still perceive a lag behind other financial services sectors, "the Internet has now taken hold in the strategies of insurance companies…."

All in all, this survey would be more useful and meaningful had more companies responded. The survey was not lengthy and could have been filled out in relatively short order. Hopefully no one will make any technology plans or decisions based on such a small sampling.

*Steven Brightbill is a contributing writer and Assistant Editor of Sounding Line