ChannelPoint targets insurers
The company is aiming its Internet-based software suite at a notoriously tech-averse insurance industry.
The two-year-old company targets insurance carriers that on average invest less than one percent of their revenues on technology. Banks and other financial institutions, which invest five to 10 times that amount, enjoy far greater cost savings and happier customers.
The product enables brokers to electronically price out, mix and match, and order policies for customers through the ChannelPoint's Web site. On the carrier end, the software is tied into legacy systems to handle billing, claims, and other enterprise-level processes. By all accounts, ChannelPoint is the first firm to offer such a product specifically for the insurance industry.
The privately held company has signed up United HealthCare, the nation's biggest health insurer, and Regence Blue Cross/Blue Shield, the largest carrier in the Pacific Northwest. Both carriers have also taken financial stakes in the company. The firm is also in talks with several other large carriers.
"You're going to see insurance carriers going out of business over the next five years simply because they don't adapt to new technology," predicted Jeffrey Bork, ChannelPoint's senior vice president for marketing. As other industries busily digitize their processes, insurance carriers are awash in a sea of paper, he said.
ChannelPoint's aim: Cutting down the amount of paper that passes through brokers' hands by 90 percent, nothing short of what Bork calls "reinventing the way insurance companies do business."
ChannelPoint means to work within the existing system, with insurance brokers still doing most of the selling for carriers.
"We don't want to be in a position where we're alienating the brokers," said Bork. "This is a business where brokers carry tremendous power." He contrasted that with the securities industry, where online brokers like E*Trade are threatening traditional brokers.
Health care technology analyst Christopher Pavlic of the Aberdeen Group thinks eventually even most insurance brokers may become relics as consumers discover the appeal of creating self-customized policies.
"Over time, there will be more direct customer relationships," Pavlic said, but he thinks ChannelPoint's strategy of "trying to augment, not destroy, the carrier/broker relationship" seems wise.
"Insurance documents are pretty complex, and people don't always make the best decisions online, even when they are just buying stocks," he said.
ChannelPoint's software sells for tens of millions of dollars to large customers.