October 17th - 19th, 1999
Hyatt Regency Baltimore, MD

Dessert Reception: Webifying Insurance
Mark H. Benson, Executive VP, CyberComp
Sunday, October 17th, 7:30-9:00 p.m.

"The Key to Going Virtual: Focus, Focus, Focus"

"Virtual" insurance companies may forego large staffs and sprawling corporate headquarters, but they can't afford to lose sight of several key principles, a leader of an Internet-based company that provides workers' compensation coverage told fellow insurers.

Virtual companies can succeed if they attack niche markets, remain tightly focused and contain the impulse to jump into a host of markets, said Mark H. Benson, executive vice president and a founder of Cybercomp, Lawrenceville, N.J. Benson spoke at "Continuing the E-Volution," A.M. Best Co.'s annual Insurance Information and Technology Conference in Baltimore. The conference continues through Oct. 19.

Cybercomp targets small businesses of fewer than 50 employees, companies that insurers traditionally have found relatively expensive to solicit and service. The unit, part of Reliance Group Holdings Inc., New York, works through about 1,200 independent agents in 43 states. The agents file business by completing a short online questionnaire. Underwriting is automated, with billing and customer records also handled electronically.

Benson had some advice for companies looking to set up virtual units. Specifically, they should:

- Keep a narrow focus. "Routinely, people are trying to do too much," Benson said. "There are a lot of great ideas, but none get done."

- Focus on hiring talented people who understand how insurance works. "This is not a great place to learn the business," he said.

- Delegate authority and provide support. "I'm the only one who has the authority to make fatal errors," he said.

- Determine accountability. "The people I report to hold me accountable only for the numbers," Benson said. "They don't care how many meetings I was in yesterday."

- Create a "get it done" culture. "I don't have seven assistants and three secretaries and all the things that go along with the trappings of running an insurance company," he said.

- Keep a finger on the pulse of the market and remain nimble. Other insurers are considering ventures similar to his, he said. "I'm looking forward to the next five competitors--it gives more agents a reason to be online. It's the next 40 companies after that I worry about."

Three years ago, Cybercomp became the first insurer to quote and bind workers' comp coverage over the Internet. In 1998, the company wrote $81 million in gross premium, and it expects to report numbers far higher for 1999, Benson said.

Three years ago, finding enough agents who had computer savvy and the right equipment was a problem. But that issue is fast disappearing, to the point where it's no longer a hurdle, he said.

Benson said he's considering expanding the unit's focus. For instance, agents that market workers' comp coverage on Cybercomp's behalf have been pushing the company to offer commercial umbrella coverage, a request Benson said is being considered. "But if we can't make it quick, if we can't make it consistent, we just won't do it," he said.

By Lee McDonald
Executive Editor