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Insurance companies stand to reap enormous competitive advantages from the growth of technology such as the Internet, but many insurers still have not positioned themselves to do so, a report says.

While a majority of insurers use the Internet, a significant percentage have no Internet strategy, according to a recent Conning & Co. study. Fifty-six insurers responded to the survey.

As a result, many insurers are missing out on opportunities to market their products and services, gain access to information on potential customers and establish links with their agents and brokers and other service providers, the Hartford, Conn.-based asset management and insurance research company said in its report.

"Even if they do not actually sell their products over the Internet, insurers need to capitalize on the Internet's business lead generation capabilities," the study said.

Furthermore, insurers should "create cost-effective and powerful internal intranets that present new capabilities for connectivity with organizations and with agents and business partners."

Conning's study focused on electronic commerce in the insurance industry and the Internet's role in that area. The study also reported on how technology is enabling insurers to outsource more of their internal functions to increase efficiency.

According to the study, electronic commerce, broadly defined, "involves the conduct of business using computers over digital networks and includes all intercompany and intracompany electronic functions that enable commerce-involving the transfer of information as well as business transactions."

Electronic commerce encompasses various applications of technology, including agent/sales interface, claims processing, document management, administrative systems and the Internet.

The concept of selling insurance via the Internet's World Wide Web, though widely discussed, so far has been slow to take hold, Conning's study pointed out.

"It is clear that the Internet's current potential for electronic commerce lies more in facilitating sales and marketing-for example, by providing product information, generating prospects, etc.-than in actually closing sales," the study said.

"While transaction activity is likely to evolve, there is currently more searching for information on the Internet than actual selling and buying," according to the report.

"Sixty percent of insurance companies either have their own Web sites or are planning one, and almost one-third either have or are planning to develop intranets," Conning found in the study.

"However, this means 40% of insurers have no Internet plans. Given the relative ease of exploiting this new technology and its power, this is too high a proportion of 'no shows, " the report stated.

Companies that use intranets for internal communication have increased their efficiency by delivering information electronically and have achieved substantial savings in paper and printing costs, the study said. For example, electronic access to underwriting or marketing information removes the need to store duplicative printed materials.

Technology also has spurred the growth of outsourcing among insurers, Conning's study found.

Systems available today permit specialized vendors to take over services such as premium billing and claims administration, freeing the insurer to focus on other key areas of its business, according to the study.

Although technological innovations such as intranets and outsourcing can offer significant benefits, insurance companies must carefully consider their options and approach them strategically, Conning advised.

Copies of "Electronic Commerce and the Internet: A Whole New World," are available for $495 each from Conning & Co., CityPlace II, 185 Asylum St., Hartford, Conn. 06103; 203-527-1131.