What's New in Cybertalk?

by Jean Gora
April 1999

Note: CyberTalk is a column that appears monthly in  LOMA's Resource, the magazine for insurance and financial services management. To see more contents of the magazine and to see how to subscribe, click on RESOURCE MAGAZINE.

Life Companies Expand Online Service Functions

Use of the Internet by insurance companies to provide customer service has increased over the past year. This column has previously noted the widespread use of the Internet in conjunction with corporate pension plans, 401(k) plans in particular. Now, a number of life insurers have also begun to offer serious life insurance customer service functions on the Internet, and two are even allowing online filing of death claims—Northwestern Mutual Life (NML) and MONY.

This month’s CyberTalk examines the customer service sections of the sites of these two life insurers. Both insurers rely on agency distribution. However, they are both willing to transfer life insurance customer service functions to the Internet and away from their agents and their own call centers.

These two sites do some things very well. For example, they provide a customer service button on the welcome screen so that customers do not have to wade through pages of marketing material to reach the customer service section.

The customer service button is also useful for claimants. In many cases, the person who files a death claim is not the same as the person who purchased the policy. (The purchaser may be deceased.) The filer probably has had no previous contact with the insurer’s Web site. Additionally, the filer may be experiencing great grief and probably has no particular interest in learning about the insurer. Hence the most effective insurer is probably one who makes claim filing hassle-free.

MetLife, The Principal, New York Life, and State Farm include a customer service button on their welcome screens. Prudential, John Hancock, Allstate, and Nationwide do not, although many of them include a button that allows access to a password-protected and/or personalized section of the Web site. Nationwide includes a claim button that accesses only a phone number and an agent e-mail box.

Both NML and MONY use frequently asked questions (FAQs) effectively. Because insurance policies are complex, they require extensive written documentation, and customer service queries frequently concern issues related to this documentation. Even if queries are made by telephone, customer service staff may have to refer customers to written material. Automated voice response systems work well when the number of alternatives is limited and the alternatives themselves are easily remembered. They work less well when the alternatives become numerous and complex. Customers may not understand comments made by customer service—either live or via AVR—and may benefit from being able to read written information several times on their own.

Internet users—as their presence on the Internet shows—have some willingness to read. By answering their questions through FAQs, insurers may make some customer service calls unnecessary, reducing the number of customer service representatives needed and transferring the communications charges from the insurer (through an 800-number service) to the customer, who bears his/her own cost of accessing the Internet. In cases where the insurer might previously have mailed written documentation to the customer, the insurer saves on both printing and postage.

The next section compares three areas in the customer service sections of NML’s and MONY’s sites: death claim filing, changing a beneficiary, and billing and payment. Both of these insurers invite e-mail from customers who do not find answers to their questions on the company’s Web site. It should be noted that MONY’s site allows personalization, and NML’s does not.

Northwestern Mutual Life

The customer service section of NML’s site is called the Customer Service Connection. It has two major sections, one on life and disability insurance and one on annuities and IRAs. The life and disability insurance section has six parts, under the following headings:

• Name, address, and policy changes

• Paying your premiums

• Disability claim—if you have become disabled

• Death claim—if the insured person has died

• Receiving life insurance and annuity/IRA proceeds

• Making the most of your policy

One attractive feature of this list is that it allows people who want to file claims to avoid reading a lot of detail about issues that are extraneous to claim filing. Someone who goes to the death claim section sees the following headings:

• How do I submit a life insurance claim?

• Once the claim is approved, how will payment be made to the beneficiary(ies)?

• Receiving life insurance and annuity/IRA proceeds

Someone who wants to submit a claim is instructed to open a form called "report of insured’s death form." That form requests the insured’s name, date of birth, policy number, cause of death, exact date of death, address, place of death, other policies owned by the insured, the filer’s name, relationship to the insurers, and daytime phone number. The filer can then submit the form online. The site allows the filer to view a completed sample report of death form. Then the site describes alternative ways payments can be made to beneficiaries.

Filing a disability claim is somewhat more complex. The disabled person is invited to file a "preliminary notice of disability" on the Internet. That form requests date of disability, cause of disability (accident, sickness or both), a description of the disability, occupation, whether the insured has NML group disability insurance, NML group policy number, type of disability benefit sought (total disability, partial disability, overhead expense, buyout, key person), waiver of premium or payor benefit if a life insurance policy is also involved, insured’s name and policy number, identity and phone number of the person completing the notification, whether an agent was notified and, if so, when.

The site supplies useful FAQs concerning changing policyowners and beneficiaries. To file a change of beneficiaries, the policyowner must print out the form and mail it. To change a policyowner, the individual must contact an agent or NML by e-mail or phone to obtain a change of policyowner form.

The change of beneficiary FAQ lists eight brief questions and provides brief answers to them. Once again, the customer does not have to read long explanations to have questions answered.

Here are several samples:

• Who is the beneficiary? The beneficiary is the person or persons designated by the policyowner to receive the proceeds of a life insurance policy or annuity/IRA when the insured individual dies.

• Who can change the beneficiary? The owner of the policy or annuity is the only person with the right to make this change.

• May I have more than one beneficiary? Yes you may name multiple beneficiaries.

The billing and premium payment FAQ includes a similar list.

• When are payments due?

• Why did the amount of my bill recently change?

• What happens to my policy if the premium is not paid?

• Why did I receive an "urgent notice" if I have already paid my bill?

The site provides clear, brief answers to these questions. The recipient of the urgent notice above is invited to verify the status of the policy by contacting either the agent or NML. In the latter case, contact can be by e-mail or telephone. Only the NML phone number is provided. Clearly NML does not see any great value to having agents deal with such issues.

MONY

The welcome page to the customer service section of the MONY sites presents two menus for use in navigating customer service information. One menu lists international services, an agent locator, demutualization FAQs, and unit values. The international services area is for customers of MONY’s non-U.S. subsidiaries. The other menu lists three items: service FAQs, online forms, and contacts. The service FAQ area lists FAQs addressing four topics, including requesting policy/contract information, requesting billing and payment information, changing beneficiaries, and filing a death claim. The online forms area supplies forms that can be used to execute the above transactions. It also includes a change of address form.

For filing a death claim, MONY offers significantly longer responses to questions than NML does. These responses address the host of issues a survivor must deal with following a death. The death claim FAQ includes the following questions:

• How do I file a death claim with MONY?

• What do I need to do right away?

• What documents will I need?

• What should I do within the first two weeks?

• What should I do within the first month?

• What should I do within the first six months?

• What should I do when a year has passed?

• How will I receive the insurance proceeds?

The first thing the survivor is invited to do is file MONY’s online death claim form. That form asks most of the same questions found on the NML form. MONY also asks the filer to advise if the whereabouts of the policy is unknown. It also asks for the name of next of kin and relationship to the deceased, the deceased insured’s marital status, the spouse’s name, and the spouse’s date of death. The form can be submitted online.

The answers to the above questions provide useful information—much of it extraneous to insurance—which a survivor might not have readily available from another source. For example, the answer to the question about what needs to be done right away includes advice on finding a will, making funeral arrangements, ordering multiple copies of death certificates, checking with Social Security and the Veterans Administration, clipping obituary notices, calling a life insurance representative, checking the status of medical insurance coverage, contacting the deceased’s bank, consulting an attorney, and having someone watch the house during the funeral service.

MONY’s changing beneficiaries section includes both more questions and longer answers than that of NML. The MONY customer can download a change of beneficiary form and mail it. Online beneficiary filing is not yet available. Questions regarding changing of beneficiaries include:

• What is a beneficiary?

• Can I designate my minor child as a beneficiary?

• When is my change of beneficiary effective?

• Can I designate multiple persons as primary beneficiaries?

• What should I do to change my beneficiary now that I am recently married?

• Must I complete a new change of beneficiary request for to reflect a change in the beneficiary’s name due to marriage or divorce?

• Can I use one form to change the beneficiary on all of my MONY policies/contracts?

• What is a rightsholder?

• I have recently lost my policy. How do I obtain a new policy?

• What should I do if I have been divorced?

The section of the MONY site concerning billing and payment information is briefer than that of NML and provides only information on billing options and on the option of having premiums automatically withdrawn from checking. The customer is instructed to contact a MONY agent to get more information on billing and premium information. The customer can, however, fill out an online request for such information. The request form says that within two business days following receipt of the request, MONY will send a letter via U.S. mail with the customer’s last billing mode or amount, the last payment received by MONY, premium payment currently due, and minimum payment required. Obviously MONY could provide this information directly over the Internet but has not yet done so.

Much to Recommend Them

Both NML’s and MONY’s approaches have much to recommend them. NML’s treatment of customer service is strictly utilitarian. The goal is to give to customers only key functions and the information necessary to perform them. The functions are easy to find on the site. MONY’s treatment of customer service reflects more of an attempt to involve the customer. A customer is likely to personalize a site only if he or she intends to return to it. MONY also provides key functions and the information necessary to perform them, but it provides somewhat more information.

In the area of life insurance, one can question how important it is to try to involve existing customers with the company. After all, providing customer service represents a cost to the company. The objective is usually to hold costs down. If an insurer can keep a customer without providing a lot of customer service, it can operate more profitably than an insurer that encourages significant customer service dialogue.

There may, however, be important reasons for encouraging such a customer service dialogue. The dialogue may increase persistency, a possibility worth investigating. It also creates opportunities for cross-selling. An insurer that wants to use customer service to cross-sell must then decide whether it wants to drive the customer back to the agent or try to complete a sale on the Internet. An insurer with a strong commitment to agency distribution is likely to choose the first alternative.

See previous issues of CyberTalk in the CyberTalk Archives.

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