Every so often, it is valuable to revisit the Internet sites of major U.S. life insurers to see if the Internet has wrought any major changes in business models. This month, CyberTalk looks at the site of New York Life, ranked by A.M. Best as the eighth largest U.S. life insurer in 1999 in terms of life insurance in force. In general, the New York Life site remains strongly oriented to supporting the company’s traditional agency force, something it does very well. However, there are hints that the company is willing to consider a deeper involvement in e-commerce. The direct marketing and direct online operation it runs for the American Association of Retired Persons (AARP) is giving it the experience it needs to become more aggressive in insurance direct selling if that becomes appropriate in the future.

Funding Growth Internally
New York Life is one of the few leading traditional mutual insurers in the U.S. that has chosen to remain a mutual. It must, therefore, fund growth internally. In 1999, it reduced staff by 700. Like many life insurers, the company has chosen to diversify its operations only modestly and even then into closely related businesses such as asset management, retirement plan management, trust operations, and international life insurance and asset management operations. Of the company’s agents, 5,600 have registered representative licenses. The company currently sells life insurance and endowment policies in Argentina, Hong Kong, Indonesia, Korea, Mexico, and Taiwan. It has formed a joint venture in India with Max India. It is seeking to enter the Chinese market and has established a fund to invest in rural areas in China.

In March of 2000, the company established a new wholly owned subsidiary to manage all of the investment business of the parent company. The new organization, New York Life Asset Management LLC, with $130 billion in assets, incorporates eight of New York Life’s primary businesses: MainStay Management LLC, the manager of retail and institutional mutual funds; MacKay Shields LLC, an institutional money manager; Stable Value, a provider of guaranteed investment contracts (GICs) for institutional investors; New York Life Benefit Services LLL, a benefits consulting firm; Monitor Capital Advisors LLC, a quantitative money manager; Madison Square Advisors LLC, a subadvisor for Mainstay; and its securities and real state groups. This move is similar to moves by other life insurance companies to create separate operations for their asset management units to encourage them to broaden their focus beyond their insurance company parent.

In March 2000, the company also obtained authorization from the Office of Thrift Supervision for a federal thrift charter, to be known as New York Life Trust Company, FSB. This move will enable the company’s agents to offer trust services, including irrevocable life insurance trusts and discretionary and non-discretionary personal trusts.

In the second half of 1999, New York Life had a team develop a strategy to guide the company’s Internet activities for the next two years. It decided to emphasize three themes: communication and education, service, and e-commerce.

Education and Communication
New York Life believes that people want advice about their finances. If they can receive this advice from a trustworthy source, they may be willing to buy insurance products from that source. Therefore, the NYL site is advice rich. It includes a host of informative one- to three-page articles on topics relevant to individuals and owners of small businesses. For example, its Life Insurance Education Center includes articles entitled: "Your Children’s Education," "What Would My Family Do With A Million Dollars of Life Insurance?" "Love and Marriage: From Wedding Bells to Golden Anniversaries," "Finances and Divorce," and "And Baby Makes Three." Several articles are targeted especially at women, for example, "Why Women Need to Plan for Their Retirement," and "Women and Investing." There are also articles on estate planning and on what to do when someone dies.

The Business Owners Resource Center also has interesting articles on "Securing a Business Loan," "Are You a Buddy or a Boss?" "What If Your Business Partner Died Tonight?" "Where To Find Money," as well as articles on SEPs, 401k plans, and third-party administrators.

The New York Life site continues to invite customers to personalize the site by answering an online questionnaire. Based on the responses to the questionnaire, the site steers the customer to a personal folder, which addresses issues that are particularly relevant to his or her situation. The questionnaire requests information on gender, marital status, age, household income, education, age ranges of children at home, areas of greatest concern, level of investment knowledge, ownership of a business, decision-making authority regarding a company’s employee benefits program.

The site also includes an excellent, clearly worded privacy statement that explicitly states that the company uses the personalization information only to offer content relevant to the user. None of the information is linked back to the individual customer. However, NYL does use aggregate information to do basic demographic research about personal folder users.

Service
New York Life has operated a virtual customer service center on the Internet since 1998. It relaunched this center in September 2000, giving policyowners the ability to obtain policy values, change addresses, request consultation with an agent, and gather premium information. Policyholders with in-force traditional life, term, and fixed annuities can use their personal identification numbers (PINs) to initiate transactions between 7 a.m. and 10 p.m. EST six days a week. Contact with the company through interactive voice response and by telephone is also possible.

The site lists the following products that are available for online services: whole life, term policies, universal life, NYLIAC Accumulator, LYLIAC Protector, annuities, Asset Preserver (which combines the benefits of life insurance and long-term care insurance), and pensions. Individuals with MainStay mutual funds can access them online. The same is true of employees covered under MainStay retirement plans.

E-commerce
NYLife Securities already offers full online trading capability including trading of MainStay retail mutual funds. It plans to develop direct purchase capability for MainStay customers. As indicated above, NYL also operates a direct marketing operation for the American Association of Retired Persons (AARP) in Tampa, Florida. The operation generated $200 million for New York Life in 1999. It includes online Internet sales capability. New York Life plans to build a technology platform that will support online sales of life insurance and annuities in case the company decides it needs to use one.

A Well-Designed Site
New York Life has devoted great attention to presenting a clear consistent vision of the company across its multiple business units that have a Web presence. This attention has paid off. The site is easy to navigate and flows well—quite an accomplishment given the complex information covered by the site. If a customer wants to go directly to the customer service center, he or she can do so directly from the main page. Similarly, the main page provides direct links to features enabling the customer to locate an agent or an office in his or her postal zip code. This part of the site also includes a link to an article entitled "What Your Agent Does for You." Similarly, there are direct links to related New York Life Web sites focused on long-term care, the MainStay mutual funds, New York Life Benefit Services, and NYLife Securities.

Interestingly, the main page also has a link to New York Life’s Chinese Web site, which is targeted at least initially at Chinese Americans. In April of 2000, New York Life held its sixth annual national Chinese market conference for 200 of its agents across the country. Sy Sternberg, chairman, president, and CEO of New York Life has been a vocal proponent of giving China permanent normal trade relations status. New York Life has representative offices in Beijing, Shanghai, Guangzhou, and Chengdu, China.

New York Life’s site also has a section devoted to agent recruiting. It includes articles on what it takes to be a successful agent, why so many of NYL’s agents are members of the Million Dollar Round Table, why being an agent is a good career for a woman, and how agents contribute valuable services to their communities. There are profiles presenting individual agents as caring, compassionate people.

Boosting Credibility
New York Life’s Internet site presents it as a strong life insurance company that maintains loyalty to its origins and invests in its traditional distribution system. At the same time, it seeks to expand the focus of this system by directing it toward investment products and insurance products incorporating investment elements. The many articles on the site provide the kind of advice the company’s agents provide as well. In so doing, they boost the agents’ credibility. By presenting agents as caring individuals, NYL presents them in quasi-paternal and maternal roles. When prospective customers get tired of trying to solve the puzzle of their own finances, New York Life will be there to help.

Those who monitor the sale of products and services on the Internet are periodically driven to speculate on whether all sales will migrate there. Will a personal sales force be needed to sell anything? People’s finances are complex; they are complex because people are complex. Therefore, even if the Internet facilitates comparison shopping and holds down prices, some people may be driven by other more basic needs—such as the need to receive reassurance from someone kind who offers helpful advice. Those who predict the imminent demise of agents may be wrong.